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Eversource Energy Reports Third Quarter Results

HARTFORD, Conn. & BOSTON--(BUSINESS WIRE)--

Eversource Energy (ES) today reported earnings of $289.4 million, or $0.91 per share, in the third quarter of 2018, compared with earnings of $260.4 million, or $0.82 per share, in the third quarter of 2017. In the first nine months of 2018, Eversource Energy earned $801.7 million, or $2.52 per share, compared with earnings of $750.6 million, or $2.36 per share, in the first nine months of 2017.

Results in the third quarter of 2018 include an after-tax impairment charge of $26 million, or $0.08 per share, related to Eversource Energy’s investment in the proposed Access Northeast natural gas pipeline project and non-recurring tax benefits of $18 million, or $0.06 per share, related to federal and state tax law changes.

In addition to reporting third quarter results, Eversource Energy today reaffirmed its 2018 earnings per share (EPS) projection of $3.20 to $3.30 per share and its long-term EPS growth rate of 5 to 7 percent.

“2018 continues to be a year of strong operational and financial performance for Eversource Energy,” said Jim Judge, Eversource chairman, president and chief executive officer. “We are delivering reliable, efficient and responsive service to our customers, while continuing to be an attractive investment for our shareholders.”

Electric Transmission

Eversource Energy’s transmission segment earned $109.5 million in the third quarter of 2018 and $329.6 million in the first nine months of 2018, compared with earnings of $99 million in the third quarter of 2017 and $289.6 million in the first nine months of 2017. Improved results were due primarily to a higher level of investment in Eversource’s electric transmission system.

Electric Distribution

Eversource Energy’s electric distribution segment earned $173.8 million in the third quarter of 2018 and $379.3 million in the first nine months of 2018, compared with earnings of $157.4 million in the third quarter of 2017 and $393.4 million in the first nine months of 2017. Improved third quarter results were due primarily to higher distribution margins1, partially offset by the divestiture of New Hampshire generation assets and higher property tax and depreciation expense. Lower year-to-date results in 2018 were due primarily to lower generation earnings and higher depreciation and property tax expense.

Natural Gas Distribution

Eversource Energy’s natural gas distribution segment lost $12.6 million in the third quarter of 2018 and earned $50.2 million in the first nine months of 2018, compared with a loss of $6.2 million in the third quarter of 2017 and earnings of $49.1 million in the first nine months of 2017. Lower third-quarter results were due primarily to higher operation and maintenance expense.

Water Distribution

Eversource’s Aquarion Water Company subsidiary earned $17.6 million in the third quarter of 2018 and $26.3 million in the first nine months of 2018. Eversource Energy acquired Aquarion Water in December 2017.

Eversource Energy Parent and Other Companies

Eversource Energy parent and other companies earned $1.1 million in the third quarter of 2018 and $16.3 million in the first nine months of 2018, compared with earnings of $10.2 million in the third quarter of 2017 and $18.5 million in the first nine months of 2017. The 2018 results include the Access Northeast impairment charge and non-recurring tax benefits noted above.

The following table reconciles 2018 and 2017 third quarter and first nine months earnings per share:

             
        Third Quarter   First Nine Months
2017   Reported EPS   $0.82   $2.36
    Higher transmission earnings in 2018   0.03   0.13
   

Higher electric and natural gas distribution margin in 2018

 

0.09

 

0.11

    Water distribution earnings in 2018   0.06   0.08
    Non-recurring tax benefit at Eversource parent   0.06   0.06
   

Higher/(lower) earnings at Eversource parent and other in 2018 (ex. tax benefit and impairment)

 

(0.01)

 

0.01

    Impairment charge related to Access Northeast   (0.08)   (0.08)
   

Higher electric and natural gas depreciation, property tax and interest expense and other in 2018

 

(0.03)

 

(0.09)

    Lower generation earnings in 2018   (0.03)   (0.06)
2018   Reported EPS   $0.91   $2.52
     

Financial results by segment for the third quarter and first nine months of 2018 and 2017 are noted below:

Three months ended:

       
                 

(in millions, except EPS)

 

September 30,
2018

 

September 30,
2017

 

Increase/
(Decrease)

 

2018 EPS1

Electric Transmission   $109 .5   $99 .0   $10 .5   $0 .34
Electric Distribution   173 .8   157 .4   16 .4   0 .55
Natural Gas Distribution   (12 .6)   (6 .2)   (6 .4)   (0 .04)
Water Distribution   17 .6   --     17 .6   0 .06
Eversource Parent and Other Companies   1 .1   10 .2   (9 .1)   ---  
Reported Earnings   $289 .4   $260 .4   $29 .0   $0 .91
 

Nine months ended:

       
                 

(in millions, except EPS)

 

September 30,
2018

 

September 30,
2017

 

Increase/
(Decrease)

 

2018 EPS1

Electric Transmission   $329 .6   $289 .6   $40 .0   $1 .04
Electric Distribution   379 .3   393 .4   (14 .1)   1 .19
Natural Gas Distribution   50 .2   49 .1   1 .1   0 .16
Water Distribution   26 .3   --     26 .3   0 .08
Eversource Parent and Other Companies   16 .3   18 .5   (2 .2)   0 .05
Reported Earnings   $801 .7   $750 .6   $51 .1   $2 .52
 

Retail sales data:

     

Three months ended:

             
    September 30, 2018   September 30, 2017   % Change
Electric Distribution (Gwh)            
Traditional   2,206   2,020   9.2
Decoupled   13,110   12,076   8.6
Total Electric Distribution   15,316   14,096   8.7
             
Natural Gas Distribution (mmcf)            
Traditional   5,984   5,550   7.8
Decoupled and Special Contracts   5,358   5,975   (10.3)
Total Natural Gas Distribution   11,342   11,525   (1.6)
 
     
Nine months ended:            
    September 30, 2018   September 30, 2017   % Change
Electric Distribution (Gwh)            
Traditional   7,857   7,542   4.2
Decoupled   32,814   31,889   2.9
Total Electric Distribution   40,671   39,431   3.1
             
Natural Gas Distribution (mmcf)            
Traditional   35,745   32,233   10.9
Decoupled and Special Contracts   37,580   37,453   0.3
Total Natural Gas Distribution   73,325   69,686   5.2
 

Eversource Energy has approximately 317 million common shares outstanding and operates New England’s largest energy delivery system. It serves nearly 4 million electric, natural gas and water customers in Connecticut, Massachusetts and New Hampshire.

 

Note: Eversource Energy will webcast a conference call with senior management on November 2, 2018, beginning at 9 a.m. Eastern Time. The webcast and associated slides can be accessed through Eversource Energy’s website at www.eversource.com.

1 All per share amounts in this news release 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 allocated to such business, but rather represent a direct interest in Eversource Energy's assets and liabilities as a whole. EPS by business is a non-GAAP (not determined using generally accepted accounting principles) measure that is calculated by dividing the net income or loss attributable to controlling interests of each business by the weighted average diluted Eversource Energy common shares outstanding for the period. In addition, utility electric margin and utility natural gas margin are non-GAAP financial measures. Management uses these non-GAAP financial measures to evaluate earnings results, provide details of earnings results by business, and more fully compare and explain our third quarter and first nine months 2018 and 2017 results. Management believes that these measurements are useful to investors to evaluate the actual and projected financial performance and contribution of Eversource Energy’s businesses. Non-GAAP financial measures should not be considered as alternatives to Eversource consolidated net income attributable to common shareholders or EPS determined in accordance with GAAP as indicators of Eversource Energy’s operating performance.

This news release includes statements concerning Eversource Energy’s expectations, beliefs, plans, objectives, goals, strategies, assumptions of future events, future financial performance or growth and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, readers can identify these forward-looking statements through the use of words or phrases such as “estimate,” “expect,” “anticipate,” “intend,” “plan,” “project,” “believe,” “forecast,” “should,” “could” and other similar expressions. Forward-looking statements are based on current expectations, estimates, assumptions or projections and are not guarantees of future performance. These expectations, estimates, assumptions or projections may vary materially from actual results. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, important factors that could cause our actual results to differ materially from those contained in our forward-looking statements, including, but not limited to, cyberattacks or breaches, including those resulting in the compromise of the confidentiality of our proprietary information and the personal information of our customers, acts of war or terrorism, physical attacks or grid disturbances that may damage and disrupt our transmission and distribution systems, ability or inability to commence and complete our major strategic development projects and opportunities, actions or inaction of local, state and federal regulatory, public policy and taxing bodies, substandard performance of third-party suppliers and service providers, fluctuations in weather patterns, including extreme weather due to climate change, changes in business conditions, which could include disruptive technology related to our current or future business model, increased conservation measures of customers and development of alternative energy sources, contamination of or disruption in our water supplies, changes in economic conditions, including impact on interest rates, tax policies, and customer demand and payment ability, changes in levels or timing of capital expenditures, disruptions in the capital markets or other events that make our access to necessary capital more difficult or costly, changes in laws, regulations or regulatory policy, including compliance with environmental laws and regulations, changes in accounting standards and financial reporting regulations, actions of rating agencies, and other presently unknown or unforeseen factors.

Other risk factors are detailed in Eversource Energy’s reports filed with the Securities and Exchange Commission (SEC) and updated as necessary, and are available on Eversource Energy’s website at www.eversource.com and on the SEC’s website at www.sec.gov. All such factors are difficult to predict and contain uncertainties that may materially affect Eversource Energy’s actual results many of which are beyond our control. You should not place undue reliance on the forward-looking statements; each speaks only as of the date on which such statement is made, and, except as required by federal securities laws, Eversource Energy undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

       

EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
(Thousands of Dollars)     As of September 30, 2018     As of December 31, 2017
 

ASSETS

Current Assets:
Cash and Cash Equivalents $ 59,092 $ 38,165
Receivables, Net 1,091,589 925,083
Unbilled Revenues 170,044 201,361
Fuel, Materials, Supplies and Inventory 192,508 223,063
Regulatory Assets 436,704 741,868
Prepayments and Other Current Assets 203,434 138,009
Assets Held for Sale   219,550  
Total Current Assets 2,153,371   2,487,099  
 
Property, Plant and Equipment, Net 24,967,702   23,617,463  
 
Deferred Debits and Other Assets:
Regulatory Assets 4,716,631 4,497,447
Goodwill 4,427,266 4,427,266
Marketable Securities 585,960 585,419
Other Long-Term Assets 664,739   605,692  
Total Deferred Debits and Other Assets 10,394,596   10,115,824  
 
Total Assets $ 37,515,669   $ 36,220,386  
 

LIABILITIES AND CAPITALIZATION

Current Liabilities:
Notes Payable $ 1,067,200 $ 1,088,087
Long-Term Debt – Current Portion 387,310 549,631
Rate Reduction Bonds – Current Portion 52,332
Accounts Payable 962,298 1,085,034
Obligations to Third Party Suppliers 199,762 144,046
Regulatory Liabilities 344,708 128,071
Other Current Liabilities 616,662   594,176  
Total Current Liabilities 3,630,272   3,589,045  
 
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes 3,386,324 3,297,518
Regulatory Liabilities 3,706,792 3,637,273
Derivative Liabilities 385,865 377,257
Accrued Pension, SERP and PBOP 1,013,182 1,228,091
Other Long-Term Liabilities 1,094,019   1,073,501  
Total Deferred Credits and Other Liabilities 9,586,182   9,613,640  
 
Long-Term Debt 12,151,536   11,775,889  
 
Rate Reduction Bonds 583,331    
 
Noncontrolling Interest – Preferred Stock of Subsidiaries 155,570   155,570  
 
Common Shareholders' Equity:
Common Shares 1,669,392 1,669,392
Capital Surplus, Paid In 6,234,044 6,239,940
Retained Earnings 3,882,695 3,561,084
Accumulated Other Comprehensive Loss (59,582 ) (66,403 )
Treasury Stock (317,771 ) (317,771 )
Common Shareholders' Equity 11,408,778   11,086,242  
 
Total Liabilities and Capitalization $ 37,515,669   $ 36,220,386  
 

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to shareholders about Eversource Energy and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

       

EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

 

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

(Thousands of Dollars, Except Share Information)     2018     2017     2018     2017
       
Operating Revenues $ 2,271,425   $ 1,988,512   $ 6,413,243   $ 5,856,458
 
Operating Expenses:
Purchased Power, Fuel and Transmission 842,291 651,776 2,442,953 1,955,129
Operations and Maintenance 344,475 307,773 970,881 956,274
Depreciation 208,671 194,466 612,077 571,152
Amortization 92,711 41,848 174,108 58,058
Energy Efficiency Programs 129,965 129,205 366,162 391,761
Taxes Other Than Income Taxes 187,291   168,193   547,155   479,648
Total Operating Expenses 1,805,404   1,493,261   5,113,336   4,412,022
Operating Income 466,021 495,251 1,299,907 1,444,436
Interest Expense 125,201 108,719 372,734 319,477
Other Income, Net 16,718   28,536   100,656   79,178
Income Before Income Tax Expense 357,538 415,068 1,027,829 1,204,137
Income Tax Expense 66,278   152,818   220,497   447,921
Net Income 291,260 262,250 807,332 756,216
Net Income Attributable to Noncontrolling Interests 1,880   1,880   5,639   5,639
Net Income Attributable to Common Shareholders $ 289,380   $ 260,370   $ 801,693   $ 750,577
 
Basic Earnings Per Common Share $ 0.91   $ 0.82   $ 2.53   $ 2.36
 
Diluted Earnings Per Common Share $ 0.91   $ 0.82   $ 2.52   $ 2.36
 
Dividends Declared Per Common Share $ 0.51   $ 0.48   $ 1.52   $ 1.43
 
Weighted Average Common Shares Outstanding:
Basic 317,360,110   317,393,029   317,367,252   317,415,848
Diluted 317,967,311   317,949,396   317,948,498   318,007,042
 

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to shareholders about Eversource Energy and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

   

EVERSOURCE ENERGY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

For the Nine Months
Ended September 30,

(Thousands of Dollars)     2018     2017
   
Operating Activities:
Net Income $ 807,332 $ 756,216
Adjustments to Reconcile Net Income to Net Cash Flows Provided by Operating Activities:
Depreciation 612,077 571,152
Deferred Income Taxes 70,402 374,863
Uncollectible Expense 50,720 30,111
Pension, SERP and PBOP Expense, Net 5,192 16,891
Pension and PBOP Contributions (188,874 ) (197,900 )
Regulatory Overrecoveries, Net 189,932 185,952
Amortization 174,108 58,058
Other (129,039 ) (197,876 )
Changes in Current Assets and Liabilities:
Receivables and Unbilled Revenues, Net (212,326 ) (107,473 )
Fuel, Materials, Supplies and Inventory 44,702 23,686
Taxes Receivable/Accrued, Net 70,885 88,856
Accounts Payable (72,591 ) (96,551 )
Other Current Assets and Liabilities, Net (14,858 ) (30,138 )
Net Cash Flows Provided by Operating Activities 1,407,662   1,475,847  
 
Investing Activities:
Investments in Property, Plant and Equipment (1,885,081 ) (1,642,280 )
Proceeds from Sales of Marketable Securities 405,276 520,664
Purchases of Marketable Securities (396,277 ) (506,302 )
Proceeds from the Sale of PSNH Generation Assets 193,924
Other Investing Activities (23,405 ) (24,173 )
Net Cash Flows Used in Investing Activities (1,705,563 ) (1,652,091 )
 
Financing Activities:
Cash Dividends on Common Shares (480,082 ) (451,562 )
Cash Dividends on Preferred Stock (5,639 ) (5,639 )
Decrease in Notes Payable (222,110 ) (231,500 )
Issuance of Rate Reduction Bonds 635,663
Issuance of Long-Term Debt 1,300,000 1,250,000
Retirement of Long-Term Debt (860,855 ) (320,000 )
Other Financing Activities (20,361 ) 171  
Net Cash Flows Provided by Financing Activities 346,616   241,470  
Net Increase in Cash, Cash Equivalents and Restricted Cash 48,715 65,226
Cash, Cash Equivalents and Restricted Cash - Beginning of Period 85,890   106,750  
Cash, Cash Equivalents and Restricted Cash - End of Period $ 134,605   $ 171,976  
 

The data contained in this report is preliminary and is unaudited. This report is being submitted for the sole purpose of providing information to shareholders about Eversource Energy and Subsidiaries and is not a representation, prospectus, or intended for use in connection with any purchase or sale of securities.

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