Eversource Energy (NYSE:ES) Q3 2023 Earnings Call Transcript November 8, 2023 9:00 AM ET Company Participants Robert Becker - Investor Relations Director Joseph Nolan - Chairman, President and Chief Executive Officer John Moreira - Executive Vice President and Chief Financial Officer Conference Call Participants Shahriar Pourreza - Guggenheim Partners Steve Fleishman - Wolfe Research David Arcaro - Morgan Stanley Nicholas Campanella - Barclays Durgesh Chopra - Evercore ISI Jeremy Tonet - JP Morgan Anthony C ...

EVERSOURCE ENERGY Q3 2023 RESULTS EVERSOURCE ENERGY Q3 2023 RESULTS 2 Revolution Wind Sunrise Wind | --- | --- | --- | --- | |------------------------------------------------|----------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------- ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Registrant; State of Incorporation; Address; Telephone Number; Commission File Number; and I.R.S. Employer Identification No. EVERSOURCE ...

EVERSOURCE ENERGY Q2 2023 RESULTS Safe Harbor Statement Agenda John Moreira EVP, CFO & Treasurer Q2 2023 Financial Results Offshore Wind Impairment Financing Update Providing Safe and Reliable Electric, Gas, and Clean Water Delivery to Customers Electric Service Average Duration of Interruption (Minutes) Electric Service Months Between Interruptions Electric Reliability EVERSOURCE ENERGY Q2 2023 RESULTS Supply pressures have moderated, but market pressures remain Eversource customer focused programs and inv ...

Financial Performance - Eversource earned $15.4 million, or $0.04 per share, in Q2 2023, and $506.6 million, or $1.45 per share, in the first half of 2023, compared to $291.9 million, or $0.84 per share, in Q2 2022, and $735.3 million, or $2.13 per share, in the first half of 2022[191]. - The company reported a non-GAAP EPS of $1.00 for Q2 2023 and $2.41 for the first half of 2023, excluding an after-tax impairment charge of $331.0 million related to offshore wind investments[191]. - Eversource reaffirmed its 2023 non-GAAP EPS guidance range of $4.25 to $4.43 per share, with a long-term EPS growth rate projection of 5 to 7 percent through 2027[191]. - Eversource reported a net income attributable to common shareholders of $15.4 million for Q2 2023, a significant decrease from $291.9 million in Q2 2022, primarily due to an impairment charge of $331.0 million related to its offshore wind investment[194]. - Eversource's operating revenues for Q2 2023 were $2,629.3 million, an increase of $56.7 million compared to Q2 2022[280]. - Operating income for Q2 2023 was $560.7 million, up $105.1 million from $455.6 million in Q2 2022[280]. - For the first half of 2023, operating revenues totaled $6,425.0 million, an increase of $381.0 million from $6,044.0 million in the first half of 2022[280]. Cash Flow and Debt Management - Cash flows from operating activities totaled $647.3 million in the first half of 2023, down from $841.8 million in the first half of 2022[191]. - Eversource's cash and cash equivalents were $42.2 million as of June 30, 2023, down from $374.6 million as of December 31, 2022[191]. - The company issued $3.36 billion of new long-term debt in the first half of 2023 and repaid $853 million of long-term debt[191]. - Eversource parent has a $2.00 billion commercial paper program, with $529.0 million outstanding as of June 30, 2023, compared to $1.44 billion at the end of 2022[207]. - The company expects future operating cash flows and access to debt and equity markets to be sufficient for working capital and capital investment needs[203]. Investments and Capital Expenditures - The company invested $2.04 billion in property, plant, and equipment in the first half of 2023, compared to $1.55 billion in the same period of 2022[191]. - Eversource's total capital expenditures reached $1.98 billion in the first half of 2023, up from $1.56 billion in the same period of 2022[224]. - Eversource's total equity investment in its offshore wind business increased to $2.08 billion as of June 30, 2023, compared to $1.95 billion at the end of 2022[233]. - Eversource announced a sale of its 50% interest in an uncommitted lease area for $625 million in cash, expected to close by the end of Q3 2023[234]. - The company plans to use $575 million of the proceeds from the lease area sale to provide tax equity for the South Fork Wind project[190]. Segment Performance - The regulated companies segment generated net income of $347.5 million in Q2 2023, up from $297.2 million in Q2 2022, driven by increased earnings from electric distribution and transmission segments[194]. - Electric distribution segment earnings increased by $36.5 million in Q2 2023 compared to Q2 2022, attributed to a new regulatory tracking mechanism and lower operational costs[194]. - Eversource's electric transmission segment earnings rose by $9.5 million in Q2 2023, reflecting a higher transmission rate base due to ongoing investments in infrastructure[197]. - Natural gas distribution segment earnings increased by $4.0 million in Q2 2023, supported by capital tracking mechanisms and base distribution rate increases[198]. - Eversource's water distribution segment earnings decreased by $1.9 million in the first half of 2023 compared to the same period in 2022, primarily due to higher operational expenses[199]. Impairment and Regulatory Issues - Eversource recognized a pre-tax other-than-temporary impairment charge of $401.0 million in Q2 2023, reflecting a decline in the fair value of its offshore wind investment[192]. - Eversource parent and other companies' earnings decreased by $326.8 million in Q2 2023, largely due to the offshore wind investment impairment and higher interest expenses[200]. - The impairment charge related to Eversource's offshore wind investment was noted as part of the strategic review of its offshore wind investment portfolio[304]. - The company cannot predict the ultimate outcome of regulatory proceedings affecting its transmission incentives[263]. Sales and Volume Trends - Total electric sales volumes decreased by 4.0% to 11,164 GWh for the three months ended June 30, 2023, compared to 11,635 GWh in 2022[282]. - Natural gas sales volumes decreased by 4.6% to 23,751 MMcf for the three months ended June 30, 2023, compared to 24,894 MMcf in 2022[282]. - Water sales volumes increased by 14.0% to 6,370 MG for the three months ended June 30, 2023, compared to 5,590 MG in 2022[282]. - Retail electric sales volumes decreased by 7.9% at CL&P, 2.9% at NSTAR Electric, and 3.7% at PSNH for the six months ended June 30, 2023[310]. Expenses and Cost Management - Total operating expenses decreased by $48.4 million to $2,068.6 million in Q2 2023, compared to $2,117.0 million in Q2 2022[280]. - Interest expense increased by $47.3 million to $207.4 million in Q2 2023 compared to $160.1 million in Q2 2022[280]. - Amortization expense decreased by $220.3 million in Q2 2023 and $507.0 million in the first half of 2023, driven by the November 2022 rate relief plan[299]. - Operations and Maintenance expenses showed a slight increase at CL&P of $0.8 million, while NSTAR Electric experienced a decrease of $1.1 million[323]. Risk Management - Eversource's regulated companies manage credit risk with counterparties in accordance with established practices and monitor contracting risks[358]. - Eversource's Energy Supply Risk Committee reviews and approves all large-scale energy-related transactions to mitigate market risk exposure[354].

Financial Data and Key Metrics Changes - The second quarter 2023 Electric Distribution earnings were $0.47 per share compared to $0.37 in the same quarter last year, primarily due to higher revenues from base distribution rate increases and lower O&M costs [53] - GAAP earnings were $0.04 per share in Q2 2023, down from $0.84 in Q2 2022, impacted by a $331 million after-tax impairment charge related to offshore wind investments [89][68] - Recurring earnings were $1 per share in Q2 2023 compared to $0.86 in Q2 2022, excluding the impairment charge [66] Business Line Data and Key Metrics Changes - The Electric Transmission segment earned $0.46 per share in Q2 2023, up from $0.44 per share in Q2 2022, driven by continued investments in the electric transmission system [79] - The Natural Gas Distribution segment earned $0.03 per share in Q2 2023, compared to $0.02 in the same quarter last year, due to higher revenues from capital tracking mechanisms [90] - The Water Distribution segment maintained earnings at $0.03 per share in Q2 2023, consistent with the previous year [67] Market Data and Key Metrics Changes - Supply rates for residential customers in Connecticut and Massachusetts decreased approximately 40% per kilowatt hour from January to July 2023, with New Hampshire customers seeing a similar decline effective August 1 [101] - The company expects an improvement in cash flows in 2023 compared to 2022, driven by the absence of one-time cash outflows and net proceeds from the sale of offshore wind investments [93] Company Strategy and Development Direction - The company is committed to a $21.5 billion five-year regulated capital program, reaffirming its long-term EPS growth rate in the upper half of the 5% to 7% range [69] - Eversource is focused on clean energy initiatives, having invested nearly $800 million in clean energy in 2022, including offshore wind and battery storage [48] - The company is advancing the sale of its offshore wind assets, with a focus on ensuring all agreements are in place before finalizing the transaction [92] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in completing the offshore wind transaction soon, emphasizing the importance of wind energy in transitioning to a clean energy environment [75][99] - The company remains focused on engaging with policymakers to discuss long-term solutions for energy supply challenges, particularly in light of natural gas supply constraints [46][60] - Management highlighted the need for continued investments in clean energy technologies and infrastructure to support electrification and reduce reliance on natural gas [49][61] Other Important Information - The company has $1 billion remaining under its ATM program for equity issuance, which it plans to utilize opportunistically [94] - The impairment charge recognized in Q2 2023 was based on the sale price of uncommitted lease areas and expectations regarding tax credit qualifications [68] Q&A Session Summary Question: What are the next steps regarding the Sunrise Wind repricing? - Management indicated that the repricing process is underway and that they are confident in the outcome, with an estimated investment level of around $400 million related to this [15][32] Question: Can you elaborate on the deferred storm costs recovery in Connecticut? - Management explained that recovery of storm costs will occur during a general rate proceeding, with the earliest recovery expected by the end of 2025 [16][18] Question: What is the expected impact of the offshore wind sale on FFO to debt? - Management did not disclose specific figures but indicated that the transaction would improve the FFO to debt ratio significantly, with discussions planned with rating agencies [157][158] Question: How does the recent draft decision impact investment in Connecticut? - Management expressed concern over the draft decision's potential to discourage investment but remains committed to working with stakeholders to achieve a favorable outcome [139]

Financial Data and Key Metrics Changes - The company reported GAAP earnings of $1.41 per share for Q1 2023, an increase from $1.28 per share in Q1 2022, reflecting improved operational performance [30][11] - The full-year guidance for earnings per share is maintained at $4.25 to $4.43, with a reaffirmation of a long-term EPS growth rate in the upper half of the 5% to 7% range [12][30] Business Line Data and Key Metrics Changes - Electric distribution earnings were $0.47 per share in Q1 2023, compared to $0.45 in Q1 2022, driven by increased distribution revenues [31] - The electric transmission segment earned $0.45 per share in Q1 2023, up from $0.43 in Q1 2022, attributed to higher investment levels [31] - Natural gas distribution earnings increased to $0.49 per share in Q1 2023 from $0.47 in Q1 2022, primarily due to higher base distribution revenues [31] - Water distribution segment earnings decreased by $0.01 per share due to higher operations and maintenance costs [31] Market Data and Key Metrics Changes - The company noted a significant decline in natural gas prices, which is expected to reflect positively in customer bills [9] - Electric supply rates in New England are anticipated to decline significantly in July for customers on basic or default service in Connecticut and Massachusetts [9] Company Strategy and Development Direction - The company is advancing its offshore wind projects in partnership with Ørsted, with significant investments and job creation in Rhode Island and New York [8] - A strategic review of offshore wind investments is ongoing, with expectations for updates later in the quarter [28] - The company is focused on facilitating solar development in Massachusetts, aiming to add up to 1,000 megawatts of new solar energy capacity [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing strategic review of offshore wind investments and the potential for a positive outcome for shareholders [39] - The company is actively engaging with state regulators and the governor regarding performance-based rate-making, emphasizing the importance of collaboration [41] - Concerns were raised about fuel supply for generators and the need to minimize risks to customers, especially in light of past supply issues [59] Other Important Information - The company has issued $750 million of parent company debt and retired $450 million of parent debt recently [14] - The timing of some offshore wind construction costs has been adjusted, lowering the 2023 capital projection by $500 million while extending costs into future periods [32] Q&A Session Summary Question: Can you provide more details on the sale process and pricing expectations? - Management indicated that the sale process is advanced, involving two parties, and expressed confidence in achieving good value for the projects [17][39] Question: How do you see the regulatory environment evolving in Connecticut? - Management confirmed they have a seat at the table in legislative discussions and are optimistic about reaching a workable resolution [41] Question: Will the offshore wind projects be sold as separate transactions? - Management confirmed that there will be two announcements for the leases and contracts, expected in the second quarter [51] Question: What are the expectations for the Aquarion hearing on May 15? - Management expressed hope for a favorable outcome, emphasizing their strong track record and relationships with state officials [71] Question: How does the company view future investment opportunities in offshore wind? - Management sees significant opportunities for investment in offshore wind transmission and is focused on regulated assets [57]

Financial Performance - Eversource Energy reported a net income of $491.2 million, or $1.41 per share, for Q1 2023, compared to $443.4 million, or $1.28 per share, in Q1 2022, reflecting a year-over-year increase of 10.5% in net income[181]. - Eversource's operating revenues for Q1 2023 were $3,795.6 million, an increase of $324.3 million (9.3%) compared to Q1 2022[259]. - Net income attributable to common shareholders for Q1 2023 was $491.2 million, an increase of $47.8 million (10.8%) from $443.4 million in Q1 2022[259]. - Total operating expenses for Q1 2023 were $3,046.0 million, up by $237.8 million (8.5%) from $2,808.2 million in Q1 2022[259]. - Eversource paid cash dividends of $229.4 million in Q1 2023, an increase from $213.9 million in Q1 2022[203]. Cash Flow and Debt Management - Cash flows from operating activities were $69.2 million in Q1 2023, a significant decrease from $371.9 million in Q1 2022[181]. - The company issued $1.55 billion in new long-term debt while repaying $400 million of long-term debt in Q1 2023[181]. - Eversource's cash and cash equivalents decreased to $36.0 million as of March 31, 2023, down from $374.6 million as of December 31, 2022[192]. - The company expects future operating cash flows, along with existing borrowing capacity, to be sufficient to meet working capital and capital investment requirements[191]. - As of March 31, 2023, Eversource Parent's commercial paper borrowings outstanding were $1,048.0 million, with an available borrowing capacity of $952.0 million and a weighted-average interest rate of 5.22%[195]. Capital Expenditures - Eversource invested $977.1 million in property, plant, and equipment in Q1 2023, up from $764.6 million in Q1 2022, indicating a 28% increase in capital expenditures[181]. - Eversource's consolidated capital expenditures in Q1 2023 were $789.2 million, up from $685.6 million in Q1 2022, including $42.9 million for IT and facilities upgrades[211]. - Total electric transmission capital expenditures for Q1 2023 were $246.8 million, compared to $230.5 million in Q1 2022, with projects aimed at improving grid reliability and integrating renewable energy[212]. - Total distribution capital expenditures in Q1 2023 were $499.5 million, compared to $401.4 million in Q1 2022, reflecting investments in aging infrastructure and load growth[214]. - The company expects to incur approximately $235 million in additional capital expenditures for ongoing transmission upgrades in Massachusetts[213]. Segment Performance - The electric distribution segment's earnings increased by $24.6 million in Q1 2023, primarily due to higher revenues from a rate design change and a base distribution rate increase[183]. - The electric transmission segment's earnings rose by $6.6 million in Q1 2023, driven by a higher transmission rate base from ongoing infrastructure investments[184]. - The natural gas distribution segment's earnings increased by $6.3 million in Q1 2023, attributed to base distribution rate increases and lower operations and maintenance expenses[185]. - Eversource's electric distribution revenues for Q1 2023 were $202.3 million, while natural gas distribution revenues were $117.6 million[263]. - Electric distribution revenues increased by $28.9 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to a rate design change and a base distribution rate increase[266]. Offshore Wind Investments - Eversource's total equity investment in its offshore wind business increased to $2.16 billion as of March 31, 2023, up from $1.95 billion at the end of 2022[220]. - Eversource expects to invest between $1.4 billion and $1.6 billion in its offshore wind business in 2023, with total investments projected between $2.1 billion and $2.4 billion from 2024 to 2026[233]. - The Revolution Wind project has a capacity of 400 MW with a fixed price contract at $98.43 per MWh for 20 years, while the Sunrise Wind project has a capacity of 924 MW at $110.37 per MWh for 25 years[222]. - Eversource is conducting a strategic review of its offshore wind investments, potentially leading to a sale of its 50% interest in the partnership with Ørsted, expected to conclude in Q2 2023[221]. - The expected in-service date for the South Fork Wind project is by the end of 2023, while Revolution Wind and Sunrise Wind are projected to be in service by 2025[232]. Regulatory and Market Conditions - Eversource anticipates a decrease in energy supply retail rates for the second half of 2023 compared to the first half, with new rates effective July 1, 2023, for CL&P and NSTAR Electric, and August 1, 2023, for PSNH[251]. - The estimated annual impact on Eversource's after-tax earnings from the potential elimination of the RTO ROE incentive is approximately $18 million[248]. - The federal permitting process for Revolution Wind and Sunrise Wind is expected to conclude with final approvals in Q4 2023[226]. - Eversource recorded a reserve of $39.1 million related to FERC ROE complaints as of March 31, 2023, reflecting the difference between billed rates and a 10.57% base ROE[237]. - A change of 10 basis points to the base ROE would impact Eversource's after-tax earnings by approximately $3 million for each of the four 15-month complaint periods[244]. Operational Metrics - Electric sales volumes decreased by 5.9% to 12,198 GWh in Q1 2023 compared to 12,965 GWh in Q1 2022[260]. - Firm natural gas sales volumes fell by 12.7% to 59,783 MMcf in Q1 2023 from 68,518 MMcf in Q1 2022[260]. - Retail electric sales volumes decreased by 8.8% for CL&P, 3.7% for NSTAR Electric, and 4.6% for PSNH for the three months ended March 31, 2023[286]. - Operations and Maintenance expense decreased by $17.8 million for the three months ended March 31, 2023, compared to the same period in 2022, due to reductions in various non-tracked costs[275]. - Interest expense increased by $44.6 million for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to new debt issuances and increased interest on short-term notes payable[280].

2023 First Quarter Results EVERSOURCE ENERGY Q1 2023 RESULTS All per-share amounts in this presentation are reported on a diluted basis. The only common equity securities that are publicly traded are common shares of Eversource Energy. The earnings and EPS of each business do not represent a direct legal interest in the assets and liabilities of such business, but rather represent a direct interest in Eversource Energy's assets and liabilities as a whole. EPS by business is a financial measure that is not r ...

Eversource Energy (NYSE:ES) Q4 2022 Earnings Conference Call February 14, 2023 9:00 AM ET Company Participants Jeff Kotkin - Vice President, Investor Relations Joe Nolan - Chairman, President & Chief Executive Officer John Moreira - Executive Vice President & Chief Financial Officer Conference Call Participants Durgesh Chopra - Evercore Nick Campanella - Credit Suisse Angie Storozynski - Seaport Global Gregg Orrill - UBS Paul Patterson - Glenrock Ryan Levine - Citi Paul Zimbardo - Bank of America David Paz ...