Why did Eversource report a GAAP loss for 2023 when its underlying earnings grew?

The GAAP loss of $(442.2) million came from a $1,953 million after-tax impairment of its offshore wind investments, which equals $5.58 per share. Excluding that charge and about $6.9 million of other non-recurring costs, non-GAAP EPS was $4.34, up from $4.09 in 2022. The impairment reflects lower expected sale proceeds and higher project costs, not operating performance of the core utilities.

How much cash will Eversource receive from the offshore wind exit, and when?

Management expects about $1.6 billion in 2024 and 2025. This includes roughly $930 million at close of the South Fork and Revolution Wind sales, a $170 million ITC adder for Revolution Wind at close, and about $500 million from the South Fork tax equity investment over 24 months. The Sunrise Wind sale proceeds are not disclosed and depend on the New York solicitation outcome.

What is the risk to Sunrise Wind, and what would it mean for investors?

The Q4 2023 impairment already includes about $1.22 billion for Sunrise Wind, which includes an $800 million additional charge assuming the project is not selected in New York's 2024 solicitation and is abandoned. If the project is abandoned, the additional charge would be recognized, but the company has already written down much of the project's carrying value. Investors should watch the solicitation outcome, the timing of the Ørsted agreement, and any further impairments.

Why is Eversource exploring a sale of its water business, and is a deal assured?

Management says the sale could reduce equity needs and improve regulatory diversity, while the water business (about $1.3 billion rate base, roughly 4% of consolidated rate base) is likely more valuable to a larger strategic owner or infrastructure platform. The company explicitly cannot assure the outcome or timing of the process, so no transaction is guaranteed.

What are the main drivers of Eversource's 2024 earnings outlook and dividend growth?

Key 2024 drivers include transmission capital investment, base rate changes in Massachusetts and New Hampshire, lower O&M expenses, and a lower effective tax rate. Offsetting these are higher depreciation and property taxes, higher interest expense, and share dilution. The company projects 5% to 7% regulated EPS and dividend growth through 2028, supported by about $23.1 billion of core capital investment.

ES 8-K: Earnings & Results & Regulation FD

01—Abstract

Summary

Summary of the 8-K filed February 14, 2024. Cited figures are marked; the original filing is the authoritative source.

Eversource Energy (NYSE: ES) reported a full-year 2023 GAAP net loss of $(442.2) million, or $(1.26) per diluted share, versus full-year 2022 earnings of $1,404.9 million^a ($4.05).

The loss was driven by a $1,953 million^b after-tax impairment ($5.58 per share) tied to its offshore wind investments. Excluding that impairment and about $6.9 million of other non-recurring charges, non-GAAP 2023 EPS was $4.34, up from $4.09 in 2022, and fourth-quarter non-GAAP EPS was $0.95 versus $0.92. Management framed the year as a focus on its core electric transmission and distribution and natural gas businesses, which are the drivers of its guidance.

The company is completing a full exit from offshore wind. It agreed to sell South Fork Wind and Revolution Wind to Global Infrastructure Partners and reached an agreement with Ørsted for Sunrise Wind, which may be abandoned if it is not selected in New York's fourth offshore wind solicitation. Management expects roughly $1.6 billion^c of cash inflows in 2024, including about $930 million at sale close, a $170 million ITC adder for Revolution Wind, and roughly $500 million from the South Fork tax equity investment over 24 months.

Eversource also announced it is exploring a sale of its water distribution business (Aquarion, a $1.3 billion^d rate base), with the aim of reducing equity needs and improving regulatory diversity. The company cannot assure the outcome or timing of that process. Looking forward, Eversource guided 2024 non-GAAP EPS to $4.50 to $4.67 and projected 5% to 7% compound annual EPS growth from its regulated businesses through 2028, using $4.34 as the base.

Core capital expenditures for 2024 to 2028 total $23.1 billion, and projected rate base grows from $25.4 billion in 2022 to $39.6 billion by 2028. Expected equity issuances of up to $1.3 billion, combined with potential water proceeds, are intended to support the balance sheet, which management says it aims to strengthen. Investors should weigh the strong regulated growth outlook against the offshore wind write-down, execution risk on Sunrise Wind, and the uncertain timing of the water sale.

02—Key points

Key Highlights

FY2023 GAAP net loss of $(442.2) million, or $(1.26) per share, reversed from $1,404.9 million ($4.05) in 2022, due to a $1,953 million after-tax offshore wind impairment ($5.58 per share).
FY2023 non-GAAP EPS of $4.34 rose from $4.09 in 2022; Q4 2023 non-GAAP EPS was $0.95 versus $0.92 a year earlier.
2024 non-GAAP EPS guidance of $4.50 to $4.67, with a projected 5% to 7% regulated EPS CAGR through 2028 from a $4.34 base.
Full exit from offshore wind: sales of South Fork and Revolution Wind to GIP, and an agreement with Ørsted for Sunrise Wind, which may be abandoned if not selected in New York's solicitation.
Expected 2024 offshore wind cash inflows of about $1.6 billion, including roughly $930 million at sale close and a $170 million ITC adder for Revolution Wind.
Exploration of a potential sale of the water distribution business (Aquarion, $1.3 billion rate base), with no assurance of outcome or timing.
$23.1 billion in projected 2024 to 2028 core capital expenditures, up $1.6 billion from the February 2023 plan, with rate base expected to grow to $39.6 billion by 2028; equity issuances of up to $1.3 billion are anticipated.

03—Questions

Frequently Asked Questions

Why did Eversource report a GAAP loss for 2023 when its underlying earnings grew?
The GAAP loss of $(442.2) million came from a $1,953 million after-tax impairment of its offshore wind investments, which equals $5.58 per share. Excluding that charge and about $6.9 million of other non-recurring costs, non-GAAP EPS was $4.34, up from $4.09 in 2022. The impairment reflects lower expected sale proceeds and higher project costs, not operating performance of the core utilities.
How much cash will Eversource receive from the offshore wind exit, and when?
Management expects about $1.6 billion in 2024 and 2025. This includes roughly $930 million at close of the South Fork and Revolution Wind sales, a $170 million ITC adder for Revolution Wind at close, and about $500 million from the South Fork tax equity investment over 24 months. The Sunrise Wind sale proceeds are not disclosed and depend on the New York solicitation outcome.
What is the risk to Sunrise Wind, and what would it mean for investors?
The Q4 2023 impairment already includes about $1.22 billion for Sunrise Wind, which includes an $800 million additional charge assuming the project is not selected in New York's 2024 solicitation and is abandoned. If the project is abandoned, the additional charge would be recognized, but the company has already written down much of the project's carrying value. Investors should watch the solicitation outcome, the timing of the Ørsted agreement, and any further impairments.
Why is Eversource exploring a sale of its water business, and is a deal assured?
Management says the sale could reduce equity needs and improve regulatory diversity, while the water business (about $1.3 billion rate base, roughly 4% of consolidated rate base) is likely more valuable to a larger strategic owner or infrastructure platform. The company explicitly cannot assure the outcome or timing of the process, so no transaction is guaranteed.
What are the main drivers of Eversource's 2024 earnings outlook and dividend growth?
Key 2024 drivers include transmission capital investment, base rate changes in Massachusetts and New Hampshire, lower O&M expenses, and a lower effective tax rate. Offsetting these are higher depreciation and property taxes, higher interest expense, and share dilution. The company projects 5% to 7% regulated EPS and dividend growth through 2028, supported by about $23.1 billion of core capital investment.

04—Continue

← View all 8-K filings