Eversource(US:ES)2020-11-06 20:37PART I – FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Eversource Energy and its primary subsidiaries, including balance sheets, income statements, and cash flow statements, along with combined notes for the period ended September 30, 2020 Eversource Energy and Subsidiaries Eversource Energy's consolidated financials show total assets increased to $43.5 billion, with net income attributable to common shareholders rising to $933.2 million for the nine months ended September 30, 2020 Eversource Energy - Condensed Consolidated Statements of Income Highlights | Metric | Q3 2020 | Q3 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $2,343.6M | $2,175.8M | $6,670.5M | $6,476.1M | | Operating Income | $561.2M | $509.2M | $1,534.0M | $1,154.9M | | Net Income Attributable to Common Shareholders | $346.3M | $318.9M | $933.2M | $659.0M | | Diluted EPS | $1.01 | $0.98 | $2.76 | $2.05 | Eversource Energy - Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Current Assets | $3,220.4M | $2,414.5M | | Total Assets | $43,507.3M | $41,123.9M | | Total Current Liabilities | $3,634.1M | $3,605.6M | | Total Liabilities | $29,405.8M | $28,428.3M | | Common Shareholders' Equity | $13,980.0M | $12,630.0M | Eversource Energy - Condensed Consolidated Statements of Cash Flows Highlights (YTD) | Metric | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | | Net Cash Flows Provided by Operating Activities | $1,496.2M | $1,494.9M | | Net Cash Flows Used in Investing Activities | ($2,009.7M) | ($2,451.8M) | | Net Cash Flows Provided by Financing Activities | $1,225.4M | $899.6M | | Net Increase/(Decrease) in Cash | $711.9M | ($57.4M) | The Connecticut Light and Power Company (CL&P) CL&P's total assets grew to $13.1 billion, with net income increasing to $356.1 million for the nine months ended September 30, 2020, despite decreased net cash from operations CL&P - Condensed Statements of Income Highlights | Metric | Q3 2020 | Q3 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $994.3M | $853.9M | $2,711.4M | $2,444.0M | | Operating Income | $191.2M | $190.3M | $558.3M | $528.9M | | Net Income | $120.1M | $111.7M | $356.1M | $327.0M | CL&P - Condensed Balance Sheet Highlights | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $13,084.0M | $12,185.2M | | Total Liabilities | $8,171.8M | $7,679.9M | | Common Stockholder's Equity | $4,794.4M | $4,387.8M | NSTAR Electric Company and Subsidiary NSTAR Electric's total assets increased to $12.4 billion, with net income rising to $363.6 million for the nine months ended September 30, 2020, despite lower operating revenues NSTAR Electric - Condensed Consolidated Statements of Income Highlights | Metric | Q3 2020 | Q3 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $875.4M | $878.7M | $2,270.2M | $2,358.2M | | Operating Income | $234.0M | $219.4M | $526.7M | $491.4M | | Net Income | $165.7M | $154.9M | $363.6M | $338.7M | NSTAR Electric - Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $12,386.1M | $11,888.3M | | Total Liabilities | $8,060.5M | $7,728.4M | | Common Stockholder's Equity | $4,325.5M | $4,159.9M | Public Service Company of New Hampshire (PSNH) and Subsidiaries PSNH's total assets grew to $4.5 billion, with net income increasing to $118.4 million for the nine months ended September 30, 2020, supported by higher operating revenues PSNH - Condensed Consolidated Statements of Income Highlights | Metric | Q3 2020 | Q3 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Operating Revenues | $283.7M | $280.4M | $815.3M | $797.8M | | Operating Income | $74.4M | $64.5M | $189.1M | $160.5M | | Net Income | $47.2M | $40.9M | $118.4M | $100.5M | PSNH - Condensed Consolidated Balance Sheet Highlights | Metric | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Total Assets | $4,499.3M | $4,350.7M | | Total Liabilities | $3,010.9M | $2,958.9M | | Common Stockholder's Equity | $1,488.3M | $1,391.7M | Combined Notes to Condensed Financial Statements (Unaudited) These notes detail accounting policies, regulatory matters, financial instruments, and commitments, covering COVID-19 impacts, storm restoration costs, debt and equity financing, and the Columbia Gas of Massachusetts acquisition - On October 9, 2020, Eversource completed the acquisition of Columbia Gas of Massachusetts (CMA) for a cash purchase price of $1.1 billion plus working capital70237 - The company has not experienced significant adverse impacts from COVID-19 as of the filing date but continues to monitor the situation, with regulatory mechanisms in place or developing to recover incremental costs7678 - Tropical Storm Isaias in August 2020 caused catastrophic damage, with deferred storm restoration costs estimated at $257 million for CL&P and $276 million for Eversource as of September 30, 2020, which the company believes are recoverable115116366 - Eversource recorded a pre-tax reserve of $39.1 million for the second FERC ROE complaint period, representing the difference between billed rates and a 10.57% base ROE, with the outcome of four pending complaints remaining uncertain192346 - In the first nine months of 2020, the company issued $2.36 billion of new long-term debt and 11,960,000 common shares, raising net proceeds of $929.0 million258259 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Eversource's financial condition and results, covering earnings performance, liquidity, capital resources, business development (including the Columbia Gas acquisition and offshore wind projects), and regulatory matters, highlighting earnings growth and impacts from COVID-19 and storm events Eversource Energy and Subsidiaries MD&A Eversource reported YTD 2020 GAAP EPS of $2.76, driven by a higher transmission rate base and the absence of a prior year impairment charge, while reaffirming its 2020 non-GAAP EPS guidance and progressing on strategic acquisitions and offshore wind projects Eversource Earnings Per Share (EPS) Summary | Period | 2020 GAAP EPS | 2019 GAAP EPS | 2020 Non-GAAP EPS* | 2019 Non-GAAP EPS** | | :--- | :--- | :--- | :--- | :--- | | Q3 | $1.01 | $0.98 | $1.02 | $0.98 | | YTD | $2.76 | $2.05 | $2.80 | $2.69 | - The company reaffirmed its 2020 non-GAAP earnings guidance of $3.60 to $3.70 per share and its long-term EPS growth rate of 5% to 7% through 2024254 - The acquisition of Columbia Gas of Massachusetts (CMA) was completed on October 9, 2020, for $1.1 billion, adding approximately 330,000 natural gas customers261324 - The company is developing several offshore wind projects in a 50/50 partnership with Ørsted, with an expected investment of $200 million to $400 million in 2020, though permitting delays may impact in-service dates331333343 CL&P, NSTAR Electric, and PSNH MD&A The subsidiaries' results show increased earnings driven by higher transmission rate bases and new distribution rates, with CL&P's YTD earnings rising to $356.1 million, NSTAR Electric's to $363.6 million, and PSNH's to $118.4 million - CL&P's YTD 2020 earnings increased by $29.1 million year-over-year, driven by base distribution rate increases and a higher transmission rate base434 - NSTAR Electric's YTD 2020 earnings increased by $24.9 million year-over-year, primarily due to a base distribution rate increase and higher transmission earnings435 - PSNH's YTD 2020 earnings increased by $17.9 million year-over-year, mainly from a temporary base distribution rate increase and a higher transmission rate base436 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section confirms the company's regulated operations mitigate commodity price risk by passing energy contract impacts to customers, with no material changes to market risks since the 2019 Form 10-K - The company's regulated businesses pass the economic impacts of energy contracts on to customers, resulting in no exposure to loss of future earnings from commodity price risk460 - There have been no material changes with regard to market risk items previously disclosed in the Eversource 2019 Form 10-K464 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures for Eversource and its subsidiaries were effective as of September 30, 2020, with no material changes in internal controls over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that disclosure controls and procedures are effective for Eversource and its reporting subsidiaries465 - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls466 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section confirms no material legal proceedings or changes to previously disclosed legal proceedings since the company's 2019 Form 10-K - There have been no material legal proceedings or material changes to previously disclosed legal proceedings since the 2019 Form 10-K469 Item 1A. Risk Factors This section incorporates 2019 Form 10-K risk factors and adds a detailed COVID-19 pandemic risk, highlighting potential adverse impacts on customers, operations, and financials, including cybersecurity, capital access, and project timing - A new significant risk factor has been added regarding the global pandemic of COVID-19, which could cause unfavorable impacts to customers, vendors, employees, regulators, and operations471 - Specific COVID-19 related risks include increased cybersecurity attacks, potential difficulties in accessing capital markets, uncertainty in regulatory actions for cost recovery, and potential delays in strategic development opportunities like offshore wind projects472473474475 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses the purchase of 2,277 common shares at an average price of $83.53 during Q3 2020, related to 401k matching contributions and not part of a public repurchase program Common Share Purchases - Q3 2020 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2020 | 0 | N/A | | August 2020 | 0 | N/A | | September 2020 | 2,277 | $83.53 | | Total | 2,277 | $83.53 | Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including supplemental indentures for debt offerings and CEO/CFO certifications pursuant to the Sarbanes-Oxley Act - Exhibits filed include supplemental indentures for new debt issuances by Eversource Energy and PSNH485487 - Certifications by the CEO and CFO for Eversource, CL&P, NSTAR Electric, and PSNH pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are included as exhibits485486487