01—Abstract
Summary
Summary of the 10-Q filed May 3, 2024. Cited figures are marked; the original filing is the authoritative source.
Eversource Energy's first-quarter 2024 results show net income attributable to common shareholders of $521.8 milliona, or $1.49 per diluted share, up from $491.2 million, or $1.41 per share, in the first quarter of 2023.
Operating revenues fell 12% to $3.33 billionb, driven mainly by lower energy supply procurement prices that are passed through to customers, so the decline has little effect on earnings. Operating income rose 13% to $846.0 million, helped by a $73.8 million swing in amortization and by higher transmission and distribution rate base. Management reaffirmed 2024 non-GAAP EPS guidance of $4.50 to $4.67, excluding the offshore wind sale, and a 5-7% long-term EPS growth rate through 2028.
The balance sheet is growing quickly. Total assets rose to $57.3 billionc, and property, plant and equipment net increased to $40.3 billion as capital spending reached $1.15 billion in the quarter. Long-term debt climbed to $24.9 billion after $1.35 billion of new issuance.
Cash flow from operations improved to $291.3 milliond from $69.2 million, though free cash flow after capex remained negative at roughly -$858 million. Dependence on external financing continues, supported by an at-the-market equity program that raised $75.4 million. The main investor catalysts are the pending exits from offshore wind.
Eversource agreed to sell its 50% stakes in South Fork Wind and Revolution Wind to Global Infrastructure Partners for about $1.1 billion in cash, and to sell its 50% stake in Sunrise Wind to Ørsted. Management also said it is exploring a potential sale of its water distribution business.
The Sunrise Wind sale required a write-down that will be recognized at closing, and the parent-company debt will be paid down from sale proceeds. Regulatory overhangs include CL&P's AMI decision, the water rate case appeal, and the open FERC ROE complaints.
02—Key points
Key Highlights
- Net income attributable to common shareholders rose to $521.8M ($1.49/diluted share) from $491.2M ($1.41) in Q1 2023, a 6% increase.
- Operating revenues declined 12% to $3.33B, mainly due to lower energy supply procurement costs that are passed through to customers and do not affect earnings.
- Operating income grew 13% to $846.0M, supported by a $73.8M favorable swing in amortization expense and higher transmission rate base earnings.
- Capital expenditures reached $1.15B in Q1 2024 (up from $977M), and total PP&E net reached $40.3B; long-term debt rose to $24.9B after $1.35B of new issuance.
- Operating cash flow improved to $291.3M from $69.2M, but investing outflows of $1.45B left a substantial external financing requirement.
- Offshore wind exits: sale of South Fork and Revolution Wind stakes to GIP for ~$1.1B in cash, and sale of Sunrise Wind 50% stake to Ørsted (executed April 18, 2024), with proceeds earmarked for parent-company debt repayment.
- 2024 non-GAAP EPS guidance of $4.50-$4.67 and 5-7% long-term EPS growth through 2028 were reaffirmed; a potential sale of the water distribution business is being explored.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed May 3, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $3.28B$3.75B | −12.7% |
| Operating Expenses | $2.49B$3.05B | −18.4% |
| Operating Income | $845.97M$749.57M | +12.9% |
| Interest Expense | $250.75M$194.54M | +28.9% |
| Net Income | $523.73M$491.16M | +6.6% |
| EPS (Basic) | $1.49$1.41 | +5.7% |
| EPS (Diluted) | $1.49$1.41 | +5.7% |
| Shares Outstanding (Basic) | 350.72M349.22M | +0.4% |
| Shares Outstanding (Diluted) | 351.00M349.61M | +0.4% |
05—Questions
Frequently Asked Questions
Did Eversource's earnings improve in the first quarter of 2024?
Yes. Net income attributable to common shareholders was $521.8 million, or $1.49 per diluted share, compared with $491.2 million, or $1.41 per share, a year earlier. Regulated segments contributed $1.53 per share, offset by a $0.04 per share loss at the parent and other companies, mainly from higher interest expense.
Why did revenues fall while earnings rose?
Revenues decreased $463 million, mostly because energy supply procurement costs were lower and are passed through to customers at cost. Purchased power and natural gas expense fell by a similar amount, so the change does not affect profits. Core earnings drivers, such as higher transmission rate base and the NSTAR Electric base rate increase, grew.
What is the status of the offshore wind sales, and what do they mean for investors?
Eversource agreed to sell its 50% stakes in South Fork Wind and Revolution Wind to GIP for about $1.1 billion in cash, subject to closing conditions and post-closing adjustments. It also agreed to sell its 50% stake in Sunrise Wind to Ørsted, with 50% of the price paid at closing and the rest after construction milestones. Closings are expected later in 2024. The Sunrise Wind impairment will be recognized at the sale, and proceeds will be used to reduce parent debt, which should lower financial exposure.
How is Eversource funding its capital program?
Capital spending of $1.15 billion in the quarter exceeded operating cash flow of $291 million. The gap was funded with $1.35 billion of long-term debt issued in January and April 2024, a $216 million increase in notes payable, and $75 million raised through the at-the-market equity program. Cash on hand rose to $259 million at quarter end, and commercial paper capacity was about $296 million.
What regulatory or legal risks should investors watch?
Key items include CL&P's Advanced Metering Infrastructure decision, which the company says lacks a viable cost recovery path and which will receive further testimony with a final decision expected in Q4 2024; the Aquarion Water rate case, with a PURA final decision on remand expected July 31, 2024; the pending FERC ROE complaints, where Eversource has a $39.1 million reserve for the second complaint period; and the $634 million CL&P storm cost prudency review. Management also noted that S&P revised its outlook to negative on March 5, 2024.
06—Continue