Eversource Energy Q2 FY2025 earnings call

• Progress: Made great progress halfway through 2025, executing key strategic priorities while being a pure-play pipes and wires regulated utility. Electric demand is rising, with low growth in the first half of 2025 exceeding 2%, nearly double last year's rate. A 10% increase in the 5-year infrastructure investment plan was announced in February.
• Earnings and guidance: Second quarter earnings were $0.96 per share, in line with expectations. Reaffirmed 2025 EPS guidance range of $4.67 to $4.82 per share and long-term EPS growth projection of 5% to 7% through 2029.
• Operational accomplishments: Maintained top decile reliability performance during summer heat waves, including responding to a storm in Connecticut, Southeastern Massachusetts, and Cape Cod during the July 4th holiday weekend. Issued the annual sustainability report highlighting innovative sustainability and governance achievements.
• Regulatory updates: Connecticut Senate Bill 4 passed, allowing securitization of storm costs; Aquarion divestiture process progressing; New Hampshire rate case decision was constructive; union contracts finalized in Massachusetts.
• Infrastructure projects: AMI rollout in Massachusetts progressing, with the communication network in Western Massachusetts substantially complete and construction starting in Eastern Massachusetts; Cambridge Underground substation construction moving ahead; Outer Cape battery energy storage recognized for improving reliability; Revolution Wind onshore substation construction nearing completion.

In the second quarter, transmission and distribution businesses saw solid earnings growth. Electric transmission earnings were $0.02 per share higher due to increased revenues from transmission system investments and lower interest expense, partially offset by share dilution. Electric distribution earnings were $0.02 per share higher from distribution rate increases in New Hampshire and Massachusetts, offset by higher property taxes, interest, depreciation, and share dilution. Eversource's Natural Gas segment had improved results of $0.02 per share due to base distribution rate increases in Massachusetts utilities, offset by higher O&M, interest, depreciation, and property tax expenses and share dilution. Water distribution earnings improved $0.02 per share year-over-year due to higher revenues and lower interest expense. Eversource parent losses increased $0.07 per share for the quarter due to higher interest expense from the sale of the offshore wind business.

• Reaffirmed 2025 recurring earnings per share range of $4.67 to $4.82.
• Maintained long-term EPS growth projection of 5% to 7% off of 2024 EPS base.
• FFO to debt ratio continuing to improve due to constructive regulatory outcomes and cash flow enhancements.

• Regulatory challenges in Connecticut, including uncertainties around storm cost securitization and potential impact on rate recovery.
• Moody's downgrade of Connecticut Light & Power to Baa1 from A3 due to the Connecticut regulatory environment.
• Uncertainties around the timing and outcome of regulatory proceedings affecting infrastructure investments and rate recovery.

Q: Carly Davenport asked about the balance sheet and FFO to debt, specifically confidence in hitting the 14% level by year-end and drivers of FFO to debt.

A: John Moreira responded that they are highly confident, with key drivers including rate recoveries, storm cost deferrals, and the Aquarion divestiture contributing approximately 100 basis points.

Q: Jeremy Tonet asked about New Hampshire rate case process takeaways and views on settlements vs. full litigation.

A: Joseph Nolan stated it was a constructive process, very good, with a favorable regulatory climate, and John Moreira added the importance of the PBR structure.

Q: Andrew Weisel asked about balance sheet equity issuances and Connecticut capital redeployment.

A: John Moreira said they monitor commercial paper balances and Aquarion progress, and Joseph Nolan mentioned waiting for constructive data points from the commission before redeploying capital.

Q: Anthony Crowdell asked about Joe Nolan's career at Eversource.

A: Joe Nolan talked about starting in customer service and having various roles over his 40-year career at the company.

Q: Agnieszka Storozynski asked about equity needs, storm cost recovery, Yankee Gas rate case, and Aquarion.

A: John Moreira and Joseph Nolan discussed equity needs, progress in the Yankee Gas rate case, and optimism about the Aquarion divestiture closing this year.

Q: Ryan Levine asked about implications of Connecticut courts' prudency standards clarification.

A: John Moreira explained the court's clarification on prudency standards not allowing hindsight in rate recovery, and Joseph Nolan said it improves confidence in making investments.

Q: Julien Dumoulin-Smith asked about equity needs in 2025 and second half earnings building blocks.

A: John Moreira responded that they did a $200 million equity raise in June and monitor commercial paper balances, with interest costs being a headwind in the first half but expected to be less in the second half.