Workflow
Eversource(ES) - 2023 Q4 - Earnings Call Transcript
ESEversource(ES)2024-02-14 21:50
Filings

Financial Data and Key Metrics Changes - The company reported recurring earnings of 4.34persharein2023,representingagrowthofnearly64.34 per share in 2023, representing a growth of nearly 6% over 2022 [11] - GAAP results for the year showed a loss of 1.26 per share, compared to GAAP earnings of 4.05persharein2022,primarilyduetoanoncashcumulativeimpairmentchargeofapproximately4.05 per share in 2022, primarily due to a noncash cumulative impairment charge of approximately 1.95 billion [38][43] - The board approved a dividend increase for Q1 2024 to 0.715pershare,reflectinga60.715 per share, reflecting a 6% increase over 2023's dividend level [11] Business Line Data and Key Metrics Changes - Electric transmission earned 1.84 per share in 2023, up from 1.72persharein2022,drivenbyinvestmentsinthetransmissionsystemandlowerincometaxexpenses[39]−Electricdistributionearningswere1.72 per share in 2022, driven by investments in the transmission system and lower income tax expenses [39] - Electric distribution earnings were 1.74 per share in 2023, slightly up from 1.71persharein2022,withabasedistributionincreaseoffsetbyhigherinterestexpensesandpropertytaxes[39]−Naturalgasdistributionsegmentearned1.71 per share in 2022, with a base distribution increase offset by higher interest expenses and property taxes [39] - Natural gas distribution segment earned 0.64 per share in 2023, down from 0.67persharein2022,duetoincreaseddepreciationandinterestexpenses[40]−Waterdistributionsegmentearned0.67 per share in 2022, due to increased depreciation and interest expenses [40] - Water distribution segment earned 0.09 per share in 2023, compared to 0.11persharein2022,impactedbyhigherexpensesandadisappointingdecisioninConnecticutregardingwaterrates[40]MarketDataandKeyMetricsChanges−Thecompanyisfocusingonarobust5−yearcapitalplanwithanexpectedinvestmentofapproximately0.11 per share in 2022, impacted by higher expenses and a disappointing decision in Connecticut regarding water rates [40] Market Data and Key Metrics Changes - The company is focusing on a robust 5-year capital plan with an expected investment of approximately 23.1 billion in regulated electric, natural gas, and water businesses [47] - The updated capital plan reflects a 1.6billionincreaseinutilityinfrastructureinvestmentsfrom2024through2027comparedtothepriorplan[2]CompanyStrategyandDevelopmentDirection−Thecompanyispursuingafullexitfromtheoffshorewindbusiness,withaplannedsaleofits501.6 billion increase in utility infrastructure investments from 2024 through 2027 compared to the prior plan [2] Company Strategy and Development Direction - The company is pursuing a full exit from the offshore wind business, with a planned sale of its 50% interest in South Fork and Revolution Wind projects to Global Infrastructure Partners for approximately 1.1 billion [19][20] - The company aims to focus on its utility business, which presents strong growth opportunities, while also preparing for a clean energy future [19][25] - The company is actively engaging with states to enable a clean energy future, including submitting an Electric Sector Modernization Plan to Massachusetts [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver solid operational and financial results while supporting the region's transition to cleaner energy [19] - The company anticipates a 5% to 7% EPS growth rate through 2028, based on its 2023 recurring EPS of 4.34[4]−Managementacknowledgedchallengesintheoffshorewindsector,includingsupplychaindisruptionsandrisinginterestrates,whichhaveimpactedinvestmentreturns[18]OtherImportantInformation−Thecompanyhastakenanoncashcumulativeimpairmentchargeofapproximately4.34 [4] - Management acknowledged challenges in the offshore wind sector, including supply chain disruptions and rising interest rates, which have impacted investment returns [18] Other Important Information - The company has taken a noncash cumulative impairment charge of approximately 1.95 billion after tax related to its offshore wind investment [9] - The company is planning to evaluate market interest in its water distribution business, which has a current rate base of 1.3 billion [23] Q&A Session Summary Question: What is the confidence around the 1.3 billion equity issuance? - Management indicated that the 1.3billionisanestimateandprovidesflexibilitydependingonproceedsfromassetsales,particularlyAquarion[63]Question:Canyouelaborateonthecost−sharingagreementforRevolutionWind?−Theagreementincludesacapitalcost−sharingarrangementwhereoverrunsupto1.3 billion is an estimate and provides flexibility depending on proceeds from asset sales, particularly Aquarion [63] Question: Can you elaborate on the cost-sharing agreement for Revolution Wind? - The agreement includes a capital cost-sharing arrangement where overruns up to 240 million will be shared equally, with Eversource bearing 50% of costs above that threshold [42] Question: How does the potential sale of Sunrise Wind impact equity needs? - Proceeds from the sale of Sunrise Wind to Orsted are not currently factored into the financing plan, which could adjust equity needs positively if the sale is successful [102] Question: What are the expected cost savings initiatives for 2024? - Management expects lower O&M levels in 2024 compared to 2023, driven by technology deployment and operational efficiencies [101]