Did Eversource beat or miss expectations in Q1 2024, and is guidance changing?

The filing does not include analyst consensus, so a beat or miss cannot be determined from it. Earnings of $1.49 per share were up $0.08 year over year, and management reaffirmed its full-year 2024 non-GAAP EPS guidance of $4.50 to $4.67 without raising or lowering it.

What is driving the cash flow improvement that management is emphasizing?

Management highlighted roughly $2.4 billion of known cash flow enhancements through 2025. These include about $1.1 billion from the GIP sale of South Fork and Revolution Wind, $500 million from the South Fork tax equity investment, about $600 million of 2023 under-recoveries, and $200 million of incremental storm cost recovery. Management says it expects to monetize most of the 2024 cash inflows, supporting its FFO/debt target of 14% to 15% by 2025.

What are the key risks to the offshore wind sale proceeds?

The forward-looking statements flag risks that the sales may not close on the expected timelines, terms, or pricing; that the buyers may not satisfy closing conditions; that the company may not qualify for investment tax credits; and that construction costs or offshore wind market conditions may deteriorate. Regulatory approvals from the NYPSC and FERC are still pending for the sales.

Why did revenues decline year over year even though earnings grew?

Operating revenues fell to $3.33 billion from $3.80 billion, while purchased power, natural gas, and transmission costs dropped to $1.24 billion from $1.90 billion. These are largely pass-through costs recovered from customers, so the decline reduced revenue without reducing margins. Operating income rose 13% to $846 million, and operating and maintenance expense increased only modestly.

Are there any governance concerns investors should note from the annual meeting?

Shareholders elected all nine trustee nominees, but the votes against were notable for several of them, including roughly 36 million against Cotton Cleveland and about 33 million against Joseph Nolan, who is also Chairman and CEO. The advisory say-on-pay vote passed, with about 241.6 million for and 40.7 million against. Shareholders also approved a simple majority vote proposal, a shareholder-sponsored measure.

ES 8-K: Earnings & Results, Shareholder Matters & More

01—Abstract

Summary

Summary of the 8-K filed May 1, 2024. Cited figures are marked; the original filing is the authoritative source.

Eversource Energy (ES) reported first-quarter 2024 GAAP earnings of $521.8 million^a, or $1.49 per diluted share, up from $491.2 million, or $1.41 per share, in the first quarter of 2023.

The improvement was driven mainly by the electric transmission segment ($0.50^b vs. $0.45 EPS), where higher investment in system capacity and clean energy delivery lifted earnings, and by natural gas distribution ($0.54 vs. $0.49), helped by infrastructure investment revenues and a base rate increase at NSTAR Gas. Electric distribution was roughly flat, while parent and other companies swung to a $(0.04) drag from higher interest expense. Operating revenues fell to $3.33 billion from $3.80 billion, largely because lower purchased power and natural gas costs passed through to customers, but operating income rose about 13% to $846 million.

Management reaffirmed its 2024 non-GAAP EPS guidance of $4.50 to $4.67^c, a 5% to 7% compound annual EPS growth target from a 2023 base of $4.34, and $23.1 billion of projected capital expenditures for 2024 through 2028. The board also approved a quarterly common dividend of $0.715 per share, payable June 28, 2024. The most important near-term catalyst for investors is cash flow: the company expects roughly $1.6 billion of offshore wind-related inflows in 2024 to 2026, including about $1.1 billion from the sale of its 50% interests in South Fork and Revolution Wind to GIP, with closing expected later in 2024.

Sunrise Wind's sale proceeds have not yet been disclosed. Management also pointed to about $2.4 billion^d of known cash flow enhancements through 2025 to support its FFO/debt target of 14% to 15%. The filing also reports the 2024 annual shareholder meeting results, at which all nine trustee nominees were elected and the advisory say-on-pay proposal passed.

Shareholders approved a simple majority vote proposal, and Deloitte & Touche was ratified as auditor. Daniel J. Nova was named Lead Independent Trustee and Chair of the Compensation Committee, and Loretta D.

Keane was named Chair of the Audit Committee and designated an audit committee financial expert. These governance changes are routine for investors, though the approximately 36 million votes against trustee Cotton Cleveland and roughly 33 million against Joseph Nolan (who is also CEO) signal some shareholder dissatisfaction.

02—Key points

Key Highlights

Q1 2024 GAAP net income of $521.8M ($1.49/share), up 6.2% from $491.2M ($1.41/share) in Q1 2023.
Electric transmission earnings rose to $176.7M ($0.50/share) from $155.1M, the largest contributor to EPS growth alongside gas distribution.
Natural gas distribution earnings increased to $190.6M ($0.54/share) from $170.3M, supported by infrastructure investment and a NSTAR Gas base rate increase.
Reaffirmed 2024 non-GAAP EPS guidance of $4.50 to $4.67 and 5% to 7% EPS CAGR from a $4.34 2023 base; $23.1B 2024-2028 capex plan unchanged.
Declared quarterly dividend of $0.715/share, payable June 28, 2024 to holders of record on May 16, 2024.
Offshore wind monetization: about $1.1B GIP sale of South Fork and Revolution Wind stakes expected to close in 2024, plus ~$500M South Fork tax equity investment over 2024-2026; Sunrise Wind proceeds undisclosed.
Shareholder meeting: all nine trustees elected, though several received sizable against votes; say-on-pay passed with 241.6M for vs. 40.7M against; simple majority vote proposal approved.

03—Questions

Frequently Asked Questions

Did Eversource beat or miss expectations in Q1 2024, and is guidance changing?
The filing does not include analyst consensus, so a beat or miss cannot be determined from it. Earnings of $1.49 per share were up $0.08 year over year, and management reaffirmed its full-year 2024 non-GAAP EPS guidance of $4.50 to $4.67 without raising or lowering it.
What is driving the cash flow improvement that management is emphasizing?
Management highlighted roughly $2.4 billion of known cash flow enhancements through 2025. These include about $1.1 billion from the GIP sale of South Fork and Revolution Wind, $500 million from the South Fork tax equity investment, about $600 million of 2023 under-recoveries, and $200 million of incremental storm cost recovery. Management says it expects to monetize most of the 2024 cash inflows, supporting its FFO/debt target of 14% to 15% by 2025.
What are the key risks to the offshore wind sale proceeds?
The forward-looking statements flag risks that the sales may not close on the expected timelines, terms, or pricing; that the buyers may not satisfy closing conditions; that the company may not qualify for investment tax credits; and that construction costs or offshore wind market conditions may deteriorate. Regulatory approvals from the NYPSC and FERC are still pending for the sales.
Why did revenues decline year over year even though earnings grew?
Operating revenues fell to $3.33 billion from $3.80 billion, while purchased power, natural gas, and transmission costs dropped to $1.24 billion from $1.90 billion. These are largely pass-through costs recovered from customers, so the decline reduced revenue without reducing margins. Operating income rose 13% to $846 million, and operating and maintenance expense increased only modestly.
Are there any governance concerns investors should note from the annual meeting?
Shareholders elected all nine trustee nominees, but the votes against were notable for several of them, including roughly 36 million against Cotton Cleveland and about 33 million against Joseph Nolan, who is also Chairman and CEO. The advisory say-on-pay vote passed, with about 241.6 million for and 40.7 million against. Shareholders also approved a simple majority vote proposal, a shareholder-sponsored measure.

04—Continue

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