Eversource Energy (ES) Earnings

Management highlights

- Core Strategic Milestones * Completed the sale of Aquarion Water Company for net proceeds of $1.7 billion, completing the company's transition to a pure-play regulated electric and natural gas utility focused on New England operations. * Moody's upgraded Eversource and NSTAR Electric's outlook from negative to stable, in recognition of management's successful balance sheet strengthening and consistent execution of strategy. * ISO New England preliminarily selected Eversource and Avangrid's joint proposal as the preferred solution for its 2025 longer-term transmission planning RFP. The total $2.2 billion project has an Eversource share of approximately $700 million, with an expected in-service date of 2032, and is designed to reduce transmission congestion and lower customer costs. * Received a final storm cost recovery decision from Connecticut PURA, approving $870 million of the requested $975 million, allowing the company to move forward with planned securitization of deferred storm costs. * Filed the first general CL&P (Connecticut Light & Power) rate review in almost a decade, requesting a $451 million revenue adjustment to support ongoing infrastructure investment. - Offshore Wind Update * The Revolution Wind project is 97% complete, with commercial operation expected later in 2026. The company recognized an additional $164 million after-tax charge to increase its contingent liability for the project, driven by cost increases from two stop work orders. Management states no additional incremental cost risks are expected at this time. - Regulatory Developments * Eversource has appealed the FERC March 2026 ROE decision that reduced base transmission ROE to 9.57% and ordered a multi-year refund, with arguments pending before the DC Circuit Court of Appeals. A prospective ROE decision from FERC on the company's Section 205 filing is expected by November 30, 2026. * A New Hampshire annual base rate adjustment of approximately $24 million was approved, effective August 1, 2026, as part of the company's approved multi-year performance-based ratemaking plan. - Financial & Balance Sheet Updates * Net proceeds from the Aquarion sale will be used to repay parent company debt, strengthening the balance sheet. FFO-to-debt ratios are 14.3% (S&P) and 15.7% (Moody's), more than 100 basis points above downgrade thresholds. * Total 5-year capital plan remains $21.5 billion through 2028, with potential incremental capital from the selected transmission project and Connecticut AMI deployment added to the forecast. * Published the annual sustainability report, highlighting progress on clean energy transition and stakeholder commitments.

Guidance

- Reaffirms 2026 non-GAAP EPS guidance range of $4.52 to $4.72 per share, which was already revised in March 2026 to account for the lower FERC transmission ROE and the Aquarion sale. - Reaffirms long-term EPS annual growth guidance of 5% to 7% through 2028, with management expecting growth to trend toward the upper half of this range by the end of the period. - Equity requirement over the 5-year forecast period through 2030 remains in the range of $800 million to $1.1 billion, with no equity issuances expected for the remainder of 2026. - Securitization of approximately $670 million of approved Connecticut storm costs is expected to close approximately one year from the call, with a final financing plan decision expected in Q1 2027. - Half of the $700 million Eversource share of the new Maine-New Hampshire transmission project is expected to be incurred within the current 5-year forecast period through 2030.

Segment performance

- GAAP earnings: $0.14 per share in Q2 2026, compared to $0.96 per share in Q2 2025. This quarter's GAAP results included a $111.4 million after-tax noncash charge related to the Aquarion sale and a $164 million after-tax charge related to the increased Revolution Wind contingent liability. - Non-GAAP/recurring earnings: $0.87 per share in Q2 2026, down from $0.96 per share in Q2 2025. - Electric Transmission: Lower earnings driven by the base ROE rate reduction ordered by FERC. - Gas Distribution: Lower earnings due to the absence of a prior year recoverable expenses benefit. - Electric Distribution: Increased earnings from higher electric distribution revenues. - Parent and Other: Performance was flat compared to the prior year.

Risks & headwinds

- Outcome of the appeal of FERC's ROE decision, including the risk that the court upholds the reduced 9.57% ROE and requires the full multi-year refund of $880 million, which would impact balance sheet credit metrics. - Regulatory risk associated with the CL&P rate review in Connecticut, including uncertainty around the size of the approved revenue increase and PURA's treatment of requested cost recovery. - Connecticut PURA denied full recovery of requested carrying charges on approved storm costs, and deferred $60 million in storm costs pending third-party audit, creating uncertainty around full recovery of these costs. - The AMI proposal for Connecticut currently has a negative NPV net benefit due to increased construction costs resulting from delayed approval, creating uncertainty around project approval and implementation. - There are still multiple stakeholder review and approval steps remaining for the newly selected transmission project, so final approval and build timing are not guaranteed.

Analyst Q&A

• Q: How does the denial of full storm carrying cost recovery impact your financing plan, and what is the composition of your planned $1.8 billion in storm securitization proceeds? /

  A: Management did not assume carrying cost recovery in its forecast, as it only includes high-conviction items in financial guidance, so there is no impact to the current financing plan. The $1.8 billion estimate is composed of ~$670 million in approved Connecticut storm costs, ~$450 million in expected New Hampshire storm costs, and the remaining amount reflects the disputed Connecticut carrying costs that management continues to evaluate options to recover.

• Q: What are the key next milestones for the newly selected Eversource-Avangrid transmission project, and how much capital will be spent in the current 5-year forecast? /

  A: Stakeholder comments are due August 14, ISO New England will issue a final recommendation in September 2026, and an update will be provided on the Q3 2026 earnings call. Approximately 50% of Eversource's $700 million share of the project will be spent within the current 5-year forecast period through 2030.

• Q: Why is the proposed AMI project in Connecticut projected to have a negative NPV, and what is the implementation timeline if approved? /

  A: The negative NPV is due to higher construction costs from multi-year delays in regulatory approval that the company could not move forward to lock in lower earlier pricing. If approved this fall, deployment will begin in 2027 and take 5 years to complete, with a portion of the $1 billion capital expenditure falling outside the current forecast period.

• Q: What is your strategy for maintaining credit cushion if the FERC refund is upheld, and what is your target credit cushion? /

  A: Management targets a 100 basis point credit cushion above rating agency downgrade thresholds, which it currently meets. If a full refund is required, the company would use a balanced approach to funding the refund while maintaining the target credit cushion.

• Q: What is the trajectory for your long-term 5% to 7% EPS growth target? /

  A: Management expects EPS growth to trend toward the upper half of the 5% to 7% range by the end of 2028, with gradual growth leading up to that level.