Eversource Energy (ES) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary presents mixed signals. While there is positive news such as improved gas segment earnings and deferred storm cost recovery, the FERC ROE decision impacts earnings negatively. The Q&A section reveals cautious optimism but also highlights uncertainties like potential appeals and regulatory challenges. The company's strategic investments and moderate earnings guidance provide stability, but the higher tax rate and interest costs dampen enthusiasm. Overall, the sentiment is balanced, resulting in a neutral prediction for the stock price movement.
Key Financial Performance
GAAP earnings per share (EPS) $1.61 for Q1 2026 compared to $1.50 for Q1 2025, reflecting a year-over-year increase. The increase was primarily driven by improvements in the Gas segment due to rate-based increases in Massachusetts and the implementation of the Yankee Gas rate case in Connecticut.
Non-GAAP earnings per share (EPS) $1.73 for Q1 2026 compared to $1.50 for Q1 2025, reflecting a $0.23 per share improvement. This was driven by rate-based increases in the Gas segment, continued investment in the Electric transmission system, and rate increases and cost control in Electric and Water distributions.
Electric transmission earnings Improved by $0.06 per share year-over-year, driven by continued investment in the system.
Gas segment earnings Improved by $0.18 per share year-over-year, driven by rate-based increases in Massachusetts and the implementation of the Yankee Gas rate case in Connecticut.
Parent and other losses Increased by $0.05 per share year-over-year, primarily due to a higher effective tax rate and higher interest costs.
FERC ROE decision impact Reduced the base transmission ROE from 10.57% to 9.57%, resulting in a $43.9 million after-tax charge ($0.12 per share) for Q1 2026 and an expected $70 million reduction in after-tax earnings for 2026.
Deferred storm costs recovery Approximately $2 billion in deferred storm costs and carrying charges are expected to be recovered through securitization transactions in Connecticut and New Hampshire within the next 12 to 18 months.
Capital expenditures (CapEx) Nearly $800 million through March 2026, compared to the full-year forecast of $5.1 billion.
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Operating Highlights
Revolution Wind Project: The project is 95% complete and expected to commence commercial operations in the second half of 2026, providing a significant source of energy for the New England region.
Blizzard Response: Eversource successfully restored power to over 500,000 customers during a severe blizzard in February 2026, showcasing the benefits of infrastructure investments and emergency preparedness.
Storm Cost Recovery: Eversource expects to recover approximately $2 billion in deferred storm costs and carrying charges through securitization transactions in Connecticut and New Hampshire within the next 12 to 18 months.
Aquarion Sale: Received final approval from PURA in March 2026, with the transaction expected to close after the appeal period ends in mid-June.
FERC ROE Decision Appeal: Eversource is appealing the FERC decision to lower the transmission base ROE to 9.57%, arguing for a revised rate of 11.39% based on updated market data.
Massachusetts Energy Strategy: Governor Healey signed an executive order to expand energy resources and modernize systems, addressing rising electricity demand and supply constraints.
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Risk or Challenges
Regulatory Challenges: The Federal Energy Regulatory Commission (FERC) decision to reduce the base transmission Return on Equity (ROE) from 10.57% to 9.57% has created financial uncertainty. This decision, based on outdated data, undermines investor confidence and challenges the ability to secure capital for essential utility investments. The company has appealed this decision and filed for a rehearing, but the outcome remains uncertain.
Balance Sheet Risks: The potential failure to close the Aquarion sale could impact the company's financial stability. If the transaction does not proceed, alternative financing solutions will be required, which may affect the company's balance sheet and financial metrics.
Storm Cost Recovery: The company is awaiting decisions on storm cost recovery in Connecticut and New Hampshire. Delays or unfavorable outcomes in these securitization processes could impact cash flow and financial stability.
Economic and Market Conditions: The use of outdated market data by FERC to determine ROE and the ongoing regulatory uncertainty could lead to higher costs of capital and reduced financial flexibility.
Operational Risks: The company faces challenges in maintaining and upgrading infrastructure to meet increasing electricity demand and integrating new energy resources. This includes addressing regional supply constraints and ensuring reliability amidst rising demand projections.
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Guidance & Outlook
Revised 2026 Non-GAAP Earnings Guidance: Eversource revised its 2026 non-GAAP earnings guidance to a range of $4.57 to $4.72 per share, reflecting the impact of the FERC decision and potential Aquarion sale.
Long-Term Earnings Growth Rate: The company reaffirmed its long-term earnings growth rate of 5% to 7%, based on the midpoint of the revised 2026 guidance.
Capital Plan: Eversource plans to invest $26.5 billion in utility infrastructure through 2030, with $5.1 billion allocated for 2026.
Transmission ROE Adjustment: Eversource filed a Section 205 filing to establish a new base ROE of 11.39% for transmission investments, using updated market data. This is expected to be implemented by the end of 2026, subject to refund.
Storm Cost Recovery: The company expects to recover approximately $2 billion in deferred storm costs and carrying charges through securitization transactions in Connecticut and New Hampshire within the next 12 to 18 months.
Connecticut Rate Review: Eversource plans to file a rate case for CL&P in Connecticut, addressing reliability, affordability, and stable rates. The filing is expected later this month.
Aquarion Transaction: If the Aquarion sale does not close, Eversource will proceed with a pending rate case seeking an $88 million distribution rate increase, expected to conclude by year-end.
Massachusetts Energy Strategy: Massachusetts projects electricity consumption to rise by nearly 15% by 2035 and 50% by 2045, with peak demand increasing faster. The state aims to expand energy resources and modernize systems to address these needs.
Connecticut AMI Opportunity: Eversource is awaiting further steps on the Connecticut AMI opportunity following constructive hearings earlier this year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:What are the latest thoughts on the potential for further appeals in the Aquarion process?
A:Joseph Nolan expressed satisfaction with the PURA decision and mentioned that they are vigilant about potential appeals. He stated that while they intend to close the transaction, it would not be catastrophic if it doesn't close.
Q:What is the timing for the FERC ROE decision and potential settlement?
A:John Moreira stated that a new rate is expected to be implemented towards the end of the year. He explained that within 60 days of filing, a settlement judge will be appointed to bring parties to the table, with the settlement conference expected later this year.
Q:What is the confidence level regarding the 15-month refund period in the FERC decision?
A:John Moreira acknowledged the 15-month refund period as law and stated that they have accrued for it. He mentioned that the MISO decision could be a significant data point if the process goes the full length.
Q:What is the status and timing of the New Hampshire storm cost securitization?
A:John Moreira mentioned that the dollar amount is in the $4 to $4.70 range, including carrying charges. He expects the transaction to be completed by late 2027.
Q:Who are the parties involved in the FERC case, and what is the timeline for rate implementation?
A:John Moreira explained that the parties include consumer advocates, AG's offices, and stakeholders from six New England states. He stated that FERC has 60 days to respond and can suspend the rate for up to 5 months, with implementation expected within 7 months from the filing date.
Q:What is the current status of the Aquarion transaction?
A:Joseph Nolan stated that they are waiting for the appeal period to be exhausted, which ends on June 14, at the commission level.
Q:How is the company approaching equity capital issuance given uncertainties with FERC and Aquarion?
A:John Moreira stated that they have no urgency to go to market for equity capital. They are monitoring transactions like storm securitization, which could bring in $2 billion in cash within 12 to 15 months, and will be thoughtful about equity needs.
Q:What is the policy response to higher energy pricing in New England?
A:Joseph Nolan highlighted efforts to inject new power into the region, including Clean Energy Connect, Revolution Wind, and Vineyard Wind projects. He also mentioned resisting data centers and partnering on a natural gas pipeline enhancement to manage energy costs.
Q:What will be the assumed ROE for future earnings guidance?
A:John Moreira stated that current guidance assumes the 9.57% rate. Future guidance will reflect the rate determined by the 205 process, expected to be resolved by the fourth quarter call.
Q:What is the accounting approach for the $880 million refund exposure?
A:John Moreira stated that they have not booked reserves for the retroactive refund exposure back to 2014, as they believe they have a strong legal position. They have, however, booked for the 15-month refund period.
Q:What is the flexibility in transmission investments if FERC decisions are unfavorable?
A:John Moreira mentioned that they could potentially adjust CapEx if needed, but emphasized the importance of transmission investments in reducing customer costs and congestion.
Q:What is the status of the Connecticut PBR?
A:Joseph Nolan stated that they are focusing on creating an orderly regulatory environment and are not prioritizing PBR discussions at this time.
Q:What triggered FERC's recent decision after many years?
A:John Moreira speculated that FERC wanted to let the courts decide on the proceeding, which led to their legal action.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer on the Connecticut PBR status, stating that they are not prioritizing it and focusing on other regulatory matters. Additionally, the reasoning behind FERC's recent decision was speculative and lacked clarity.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Accounting Officer
Act precedent
Appeals FERC
Bill bill
CLP
Chief Accounting
Commonwealth energy
England transmission
FERC ROE
Massachusetts energy
action
administration
affordability concern
appeal
base ROE
blizzard
decade
decision FERC
development
electricity
energy resource
energy supply
filing
order Massachusetts
party
recovery storm
reliability affordability
restoration
safety
sheet profile
state agency
state policy
support
transmission owner
transmission system
ES Transcript
Eversource Energy (ES) Q1 2026 Earnings Call Transcript
Unknown5-7
The earnings call summary presents mixed signals. While there is positive news such as improved gas segment earnings and deferred storm cost recovery, the FERC ROE decision impacts earnings negatively. The Q&A section reveals cautious optimism but also highlights uncertainties like potential appeals and regulatory challenges. The company's strategic investments and moderate earnings guidance provide stability, but the higher tax rate and interest costs dampen enthusiasm. Overall, the sentiment is balanced, resulting in a neutral prediction for the stock price movement.
Eversource Energy (ES) Q4 2025 Earnings Call Transcript
Positive2-13
Eversource Energy's earnings call highlights strong financial performance with increased EPS and improved FFO-to-debt ratio. The raised earnings guidance and substantial capital investments in grid modernization and decarbonization are positive indicators. Despite some uncertainties in project timelines, the company's strategic focus on infrastructure and clean energy initiatives is likely to drive stock price growth. The Q&A session reveals optimism about future projects and financial stability, supporting a positive outlook.
Eversource Energy (ES) Q3 2025 Earnings Call Transcript
Positive11-5
The earnings call indicates strong financial performance with increased non-GAAP recurring earnings and improved cash flows. Positive regulatory developments and infrastructure investments support future growth. Despite a GAAP loss due to sale transactions, optimistic guidance and ongoing projects like the Revolution Wind Project bolster investor confidence. The Q&A section reveals some uncertainties, but the overall sentiment remains positive, particularly with the reaffirmation of EPS guidance and infrastructure plans. Considering the lack of market cap information, a moderate positive stock reaction is expected.
Eversource Energy (ES) Q2 2025 Earnings Call Transcript
Positive8-1
The earnings call highlights strong financial performance with improved cash flows, FFO to debt ratio, and positive regulatory outcomes like the New Hampshire rate case. Management expressed high confidence in achieving financial targets and provided optimistic guidance. Despite some uncertainties in capital redeployment and equity needs, the overall sentiment is positive, supported by constructive regulatory environments and strategic transactions like the Aquarion sale. The Q&A section reinforced confidence in financial metrics and regulatory processes, suggesting a positive stock price movement in the short term.
ES Slides
ES Report
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