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    ES
    Earnings call· Jun 2025(Q2 FY25)

    EVERSOURCE ENERGY Q2 FY25 earnings call ES

    Aug 1, 2025 Source

    Executive summary

    Eversource Energy Q2 FY25 — Solid Earnings Growth and Strengthened Balance Sheet

    Eversource Energy delivered solid Q2 FY25 earnings, reaffirming its full-year EPS guidance and long-term growth outlook. The company made significant progress in strengthening its balance sheet, driven by constructive regulatory outcomes in New Hampshire and ongoing cash flow enhancements. While the Connecticut regulatory environment remains a focus, a recent Supreme Court ruling provides clarity on prudency standards, and the Aquarion divestiture is on track to close by year-end, further improving financial metrics.

    Highlights

    5

    • Reaffirmed 2025 EPS guidance range of $4.67 to $4.82 and long-term EPS growth of 5% to 7% through 2029.

    • FFO to debt ratio improved by over 200 basis points to 11.5% as of Q1 2025, exceeding rating agency thresholds.

    • Constructive New Hampshire rate case decision approved a $100 million permanent rate increase with a 9.5% ROE and a 4-year PBR mechanism.

    • Connecticut Supreme Court ruling clarified prudency standards for rate making, preventing hindsight application in cost recovery.

    • Aquarion divestiture process progressing well, expected to close by year-end, contributing approximately 100 basis points to FFO to debt.

    Concerns

    4

    • Moody's downgraded Connecticut Light & Power to Baa1 from A3, citing the Connecticut regulatory environment.

    • Connecticut storm cost securitization timing pushed out to 2027 due to procedural schedule updates, impacting cash realization.

    • Concerns remain with certain core components of the Connecticut PBR framework, requiring ongoing stakeholder engagement.

    • Parent losses increased $0.07 per share due to higher interest expense from the absence of capitalized interest post offshore wind sale.

    Guidance & targets

    6
    CategoryTargetConfidence
    2025 EPS guidance
    $4.67 to $4.82 per share
    high materiality
    High
    Long-term EPS growth projection
    5% to 7%
    high materiality
    High
    FFO to debt ratio
    approximately 100 basis points above the rating agency thresholds
    high materiality
    High
    Aquarion sale close
    by the end of the year
    medium materiality
    High
    New long-term debt issuances at parent company
    no new long-term debt issuances
    medium materiality
    High
    ATM equity issuance
    not anticipating a big amount of equity, if any, issued
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Electric Transmission
    Due to increased revenues from continued investments in the transmission system and lower interest expense, partially offset by the impact of share dilution.
    		———$0.02 per share higher earnings
    Electric Distribution
    Benefited from distribution rate increases in New Hampshire and Massachusetts providing cost recovery of infrastructure investments, partially offset by higher property taxes, interest, depreciation, and the impact from share dilution.
    		———$0.02 per share higher earnings
    Natural Gas
    Due primarily to base distribution rate increases at both Massachusetts utilities, offset by higher O&M, interest, depreciation, property tax expenses, and the impact from share dilution.
    		———$0.02 per share improved results
    Water Distribution
    Year-over-year as a result of higher revenues and lower interest expense.
    		———$0.02 per share improved results
    Parent and Other
    Primarily due to higher interest expense resulting from the absence of capitalized interest after the sale of our offshore wind business.
    		———$0.07 per share increased losses

    Operational metrics

    20
    Electric demand growth
    over 2%nearly double the rate observed during the same period last year
    H1 2025

    Reinforcing expectations and validating investments.

    FFO to debt ratio (Moody's)
    11.5%over 200 basis points improvement from December 31, 2024
    Q1 2025

    Reflects improvement due to constructive regulatory outcomes and cash flow enhancements.

    PSNH permanent rate increase
    $100 million
    Annual

    Approved by PUC, effective July 25, 2025, based on a 9.5% ROE and 50-50% capital structure.

    PSNH authorized ROE
    9.5%
    Annual

    Approved as part of the PSNH rate proceeding.

    PSNH capital structure
    50-50%
    Annual

    Approved as part of the PSNH rate proceeding.

    PSNH performance-based rate mechanism term
    4-year
    Annual

    Approved as part of the PSNH rate proceeding.

    NSTAR Gas rate increase
    new rates expected
    November 1

    Under the annual PBR adjustment and a potential rate base rolling, elements of the approved 10-year PBR plan.

    EGMA rate increase
    approximately $62 million
    Annual

    Effective November 1, reflecting the second phase of the 2024 rate base rolling.

    Yankee Gas adjusted revenue deficiency
    approximately $190 million
    Annual

    Filing seeks to recover critical investments and cost increases since the previous rate review in 2018. Final decision expected October for rates effective November 1.

    Capital plan execution
    $2.2 billionon track to meet $4.7 billion target
    Through June 2025

    Execution on infrastructure investment plan.

    Additional capital investment opportunities
    $1.5 billion to $2 billion
    Within 5-year forecast period

    Identified opportunities beyond the current 5-year plan.

    Equity needs
    $1.2 billion
    Multi-year

    Majority expected to be issued towards the back half of the 5-year forecast period.

    Recovered deferrals
    $900 million
    July 1 of last year

    Already recovered and went into rates, contributing to FFO to debt improvement.

    Deferred storm costs (Connecticut)
    $171 million
    February 2023 through December 2023

    Additional storm costs filed, bringing total under prudency review to $980 million.

    Total deferred storm costs in rates or prudency review
    approximately 85%
    Current

    Of the $2 billion total deferred storm cost balance across three states.

    Maturing parent debt retirement
    $600 million
    2025

    Progressing as planned, final maturity this month with existing resources.

    ATM equity issued
    $200 million
    Q2 2025

    Issued in June under the ATM program. Further issuances will be closely managed.

    New Hampshire state-regulated rate base
    $2.1 billion
    Current

    Distribution side rate base.

    New Hampshire FERC-regulated rate base
    $1.7 billion to $1.8 billion
    Current

    FERC side rate base, subject to confirmation.

    Corporate segment loss
    negative $0.34
    H1 2025

    Mentioned by analyst, contributing to parent losses.

    Industry KPIs

    2
    MetricValueDetails
    Ffo to debt11.5%%
    Retail sales growthover 2%%

    Deals & partnerships

    1
    AquarionSale of water business

    Well into regulatory approval proceedings in all three states. Connecticut Supreme Court ruling on 2023 rate case appeal provided clarity on prudency standards.

    Capital programs

    4
    5-year infrastructure investment planunderway$24.2 billion
    Period spend: $2.2 billion
    Spent to date: through June of 2025

    Benefit: utility infrastructure investments

    Reflects a 10% increase over the last 5-year plan. Only includes projects with clear regulatory line of sight. $2.2 billion executed through June 2025.

    AMI rollout in Massachusettsunderway
    Spent to date: Western MA communication network substantially complete; Eastern MA network construction started; first meters installed in Western MA.
    Start: earlier this year (Western MA network)

    Benefit: transparency, efficiency, reliability to energy distribution; empowering customers

    Reached major milestone in July with substantial completion of Western Massachusetts communication network. Transition for all Massachusetts electric customers expected to take approximately 3 years.

    Cambridge Underground substationunderway
    Spent to date: advancing toward final depth of approximately 105 feet
    Start: earlier this year

    Benefit: meet growing needs and enable clean energy resources for Cambridge

    First of its kind in the United States, partnered with Boston Properties.

    Revolution Wind onshore substation constructionnearing completion
    Spent to date: expected to be substantially complete this month (August 2025)

    Benefit: provide back feed power to offshore facilities

    Eversource oversees this construction, significantly reducing critical path risk for the overall Revolution Wind project.

    Risks & headwinds

    4
    Connecticut regulatory environmentcurrent

    Moody's downgrade of Connecticut Light & Power to Baa1 from A3

    Mitigation: Ongoing engagement with PURA and stakeholders on PBR framework; Connecticut Supreme Court ruling clarifying prudency standards for rate making.

    Timing of Connecticut storm cost securitizationnear-term to medium-term

    Cash realization pushed to 2027

    Mitigation: Securitization legislation (SB4) is in place; prudency review process ongoing with PURA, with a procedural schedule extending through March next year.

    Higher interest expenseQ2 2025

    Increased parent losses by $0.07 per share

    Mitigation: Primarily due to the absence of capitalized interest after the offshore wind business sale; second half of the year not anticipated to be as significant a headwind.

    Uncertainty in Connecticut capital redeploymentongoing

    Management awaiting more constructive data points from commission before reassessing capital redeployment

    Mitigation: Watching outcome of Yankee Gas case proceeding and potential reconsideration on AMI for clarity and fair rules of the road.

    What to watch in Q3 FY25

    4

    Aquarion divestiture closing

    by year-end
    CurrentWell into regulatory approval proceedings
    TargetClosed

    Why it matters

    This sale is expected to contribute approximately 100 basis points to the FFO to debt ratio and reduce equity needs, significantly strengthening the balance sheet.

    We are well into the regulatory approval proceedings in all three states, and we expect to close the sale by the end of the year.

    Q&A highlights

    6

    Inquired about confidence in hitting 14% FFO to debt by year-end, given Q1's 11.5%, and the role of the Aquarion sale.

    Management expressed high confidence, citing rate recovery of deferrals and the Aquarion closing adding approximately 100 basis points. They expect to reach a 13% handle before the Aquarion closing.

    “Very highly confident. The biggest driver to enhance our FFO to debt is in rates, and that is the recovery of the deferrals.”

    asked by Carly Davenport · answered by John Moreira

    2 min read6 chapters

    Detailed Narrative

    01

    Electric Demand Growth & Infrastructure Investment

    Electric demand growth exceeded 2% in H1 2025, nearly double last year's rate, driven by accelerating electrification and decarbonization efforts. This growth trajectory validates the 10% increase in the 5-year infrastructure investment plan announced in February. The company is strategically upgrading and developing infrastructure to meet demand that is expected to outpace existing capacity in several regions.

    02

    Connecticut Regulatory Environment & SB4

    The Connecticut legislative session concluded with the passage of Senate Bill 4 (SB4), a comprehensive energy reform bill. SB4 allows for securitization of storm costs incurred from 2018-2025, clarifies Public Utility Regulatory Authority (PURA) requirements for rate request proceedings, and permits the state to use bonds to cover some public benefit programs, which is expected to modestly reduce customer bill impact. Management appreciates the commitment to a transparent and constructive process.

    03

    Advanced Metering Infrastructure (AMI) Rollout

    The AMI communication network in Western Massachusetts is substantially complete, marking a critical foundational step. Construction of the communication network in Eastern Massachusetts has commenced, and the installation of the first AMI meters in Western Massachusetts has begun. The full transition to AMI meters for all Massachusetts electric customers is projected to take approximately 3 years, aiming to enhance transparency, efficiency, and reliability.

    04

    Key Infrastructure Projects & Reliability

    Construction of the Cambridge Underground substation, a first-of-its-kind project in the US, is progressing well, with the site advancing toward a final depth of 105 feet. The Outer Cape battery energy storage system, fully commissioned in December 2022, received recognition for its state-of-the-art nature and seamless implementation, having successfully avoided sustained outages for thousands of customers during multiple dispatch events.

    05

    Revolution Wind Project Update

    The onshore substation construction for the Revolution Wind project, which Eversource oversees, is progressing well and is expected to be substantially complete in August 2025. Testing and commissioning are underway, with backfeed power to the offshore facilities anticipated in early 2026. This construction progress significantly mitigates critical path risk for Eversource's involvement in the project.

    06

    Connecticut Supreme Court Ruling on Prudency

    A Connecticut Supreme Court decision on Aquarion's 2023 rate case appeal provided important clarity on the applicability of legal standards for rate making. The ruling affirmed prudency standards and entitlement to carrying charges on deferred costs, specifically preventing regulators from applying hindsight in the rate recovery process. This clarification is deemed critical for supporting future capital investments and ensuring cost recovery.

    AI-generated summary of the company’s earnings call. Not investment advice.