10-QPeriod: Q3 FY2020

EVERSOURCE ENERGY Quarterly Report for Q3 Ended Sep 30, 2020

Filed November 6, 2020For Securities:ES

Summary

Eversource Energy's (ES) Q3 2020 10-Q filing indicates a stable operational environment with robust internal controls. The company's regulated entities effectively pass on commodity price impacts to customers, mitigating direct earnings exposure. While managing interest rate and credit risks, ES has implemented measures to address potential disruptions arising from the COVID-19 pandemic, including enhanced cybersecurity protocols and proactive engagement with regulators regarding customer assistance programs. The company also notes potential, though currently unquantified, impacts on project development timelines for offshore wind projects due to pandemic-related restrictions. Management has concluded that disclosure controls and procedures remain effective, ensuring timely and accurate reporting. There have been no significant changes to internal controls over financial reporting. The company continues to monitor capital markets access and the potential impact of the pandemic on its pension plans, although the latter remains funded above 100% as of September 30, 2020. Overall, the filing suggests a company proactively managing risks in a dynamic environment, with a focus on maintaining service continuity and customer support.

Financial Highlights

46 data points
Beta

Revenue

$2.34B

Net Income

$348.14M

14.9% Net Margin

EPS (Diluted)

$1.01

Total Assets

$43.51B

Cash & Equivalents

$829.00M

Free Cash Flow

-$210.53M

Financial Statements
Beta
Revenue$2.34B
Operating Expenses$1.78B
Operating Income$561.23M
Interest Expense$134.07M
Net Income$348.14M
EPS (Basic)$1.01
EPS (Diluted)$1.01
Shares Outstanding (Basic)343.08M
Shares Outstanding (Diluted)343.77M

Key Highlights

  • 1Regulated companies effectively pass commodity price risks to customers, eliminating direct exposure to earnings fluctuations from energy contracts.
  • 2Disclosure controls and procedures, along with internal controls over financial reporting, were assessed as effective as of September 30, 2020, with no material changes noted.
  • 3COVID-19 risks are being actively managed, with specific attention to cybersecurity threats, access to capital, regulatory actions, and supply chain continuity.
  • 4Potential delays in offshore wind project development timelines due to COVID-19 related work restrictions are being mitigated, though the full impact remains uncertain.
  • 5The company's pension plan remained well-funded at approximately 103% as of September 30, 2020, though future impacts from economic slowdowns are being monitored.
  • 6Eversource conducted minor open market share repurchases (2,277 shares) in September 2020, primarily related to 401k plan matching contributions.

Frequently Asked Questions

For its regulated companies, Eversource enters into energy contracts to serve customers, and the economic impacts of these contracts are passed directly to customers. This mechanism means the regulated entities have no exposure to loss of future earnings or fair values due to market risk-sensitive instruments related to these contracts.

Management, including the principal executive and financial officers, concluded that Eversource's and its subsidiaries' disclosure controls and procedures are effective. These controls ensure that required information is recorded, processed, summarized, and reported within SEC timelines. No changes that materially affect internal controls over financial reporting were identified during the quarter.

Eversource is actively managing several COVID-19 related risks, including potential increases in cybersecurity attacks and business email compromises, ensuring continued access to capital resources, navigating actions by regulators regarding customer assistance programs, managing potential delays in strategic development opportunities like offshore wind projects, maintaining supply chain integrity, and ensuring workforce safety and operational continuity.

As of September 30, 2020, Eversource's pension plan was approximately 103% funded under the Pension Protection Act. While this indicates a strong funded status, the company is monitoring how potential extended economic slowdowns due to COVID-19 could impact asset returns, interest rates, and discount rates, which could affect future obligations and costs.