Eversource Energy Reports Third Quarter Results

Eversource Energy (NYSE: ES) today reported earnings of $318.9 million, or $0.98 per share, in the third quarter of 2019, compared with earnings of $289.4 million, or $0.91 per share, in the third quarter of 2018. In the first nine months of 2019, Eversource Energy earned $659 million, or $2.05 per share, compared with earnings of $801.7 million, or $2.52 per share, in the first nine months of 2018. Results for the first nine months of 2019 include a second quarter after-tax impairment charge of $204.4 million, or $0.64 per share, related to Eversource Energy’s investment in the Northern Pass Transmission (NPT) project. Excluding that impairment, Eversource Energy earned $863.4 million¹, or $2.69 per share, in the first nine months of 2019.

Eversource Energy also today reaffirmed its 2019 earnings per share (EPS) projection of $3.40¹ to $3.50¹ per share, excluding the NPT impairment charge noted above, and its long-term EPS growth rate of 5 to 7 percent.

Jim Judge, Eversource chairman, president and chief executive officer, said the company was pleased with its financial performance to date, but most thankful for the exceptionally difficult, around-the-clock work employees undertook in mid-October after a severe Nor’easter struck large sections of our electric service territory, particularly southeast Massachusetts and eastern Connecticut. Wind gusts near Cape Cod were clocked at more than 90 miles per hour, causing extensive damage to tree cover and distribution lines. Another severe windstorm struck New England on Halloween night, causing extensive damage, particularly in Connecticut.

“We thank our employees for safely and promptly restoring service to our customers and we thank our customers for the patience they showed as we went about our work,” Judge said. “Rising to the challenge posed by extreme weather is a key element of providing the top-tier service our nearly 4 million customers expect from us.”

Electric Distribution

Eversource Energy’s electric distribution segment earned $197.3 million in the third quarter of 2019 and $422.7 million in the first nine months of 2019, compared with earnings of $173.8 million in the third quarter of 2018 and $379.3 million in the first nine months of 2018. Improved third quarter and year-to-date results were due primarily to higher distribution revenues and lower operation and maintenance (O&M) expense, partially offset by higher depreciation expense. Year-to-date results were also negatively affected by the absence of New Hampshire generation earnings in 2019.

Electric Transmission

Eversource Energy’s electric transmission segment earned $107.5 million in the third quarter of 2019 and $342.8 million¹ in the first nine months of 2019, excluding the NPT charge noted above, compared with earnings of $109.5 million in the third quarter of 2018 and $329.6 million in the first nine months of 2018. Lower third quarter earnings in 2019 resulted in part from the absence of benefits from capitalizing interest and equity costs related to the canceled NPT project. Higher full-year results are primarily due to a higher level of investment in Eversource’s transmission facilities.

Natural Gas Distribution

Eversource Energy’s natural gas distribution segment lost $17.1 million in the third quarter of 2019 and earned $57.6 million in the first nine months of 2019, compared with a loss of $12.6 million in the third quarter of 2018 and earnings of $50.2 million in the first nine months of 2018. Lower third quarter results were due in part to the timing of distribution revenues, which, as disclosed previously, will be lower than in past years in non-heating months and higher during heating months. Improved year-to-date results were primarily due to higher earnings from capital tracking mechanisms on higher levels of investment.

Water Distribution

Eversource’s Aquarion Water Company subsidiary earned $17.5 million in the third quarter of 2019 and $26.3 million in the first nine months of 2019, compared with earnings of $17.6 million in the third quarter of 2018 and $26.3 million in the first nine months of 2018. For the third quarter, higher revenues and lower depreciation expense in 2019 were offset by the absence of a gain Aquarion recorded in 2018 on the sale of land.

Eversource Parent and Other Companies

Eversource parent and other companies earned $13.7 million in the third quarter of 2019 and $14 million in the first nine months of 2019, compared with earnings of $1.1 million in the third quarter of 2018 and $16.3 million in the first nine months of 2018. Higher third quarter earnings were due primarily to the absence of the Access Northeast impairment charge in 2018, partially offset by the absence in 2019 of non-recurring benefits related to federal tax reform. Lower nine-month results were due in part to higher interest expense.

The following table reconciles 2019 and 2018 third quarter and year-to-date earnings per share:

				Third Quarter			First Nine Months
2018		Reported EPS		$0.91			$2.52
		Higher electric distribution revenues in 2019		0.06			0.15
		Higher level of electric and natural gas distribution investment mechanisms in 2019		0.02			0.07
		(Lower)/higher electric transmission earnings in 2019, excluding NPT impairment		(0.01	)		0.03
		(Lower)/higher natural gas revenues in 2019		(0.01	)		0.03
		Lower non-tracked O&M in 2019		0.04			0.03
		Lower/(higher) depreciation and property tax expense		0.01			(0.06	)
		Higher interest expense in 2019		(0.01	)		(0.04	)
		Absence of New Hampshire generation earnings		---			(0.02	)
		Other		(0.02	)		(0.01	)
		Share dilution		(0.01	)		(0.01	)
		NPT impairment charge		---			(0.64	)
2019		Reported EPS		$0.98			$2.05

Financial results by segment for the third quarter and first nine months of 2019 and 2018 are noted below:

Three months ended:

(in millions, except EPS)	September 30, 2019		September 30, 2018		Increase/ (Decrease)		2019 EPS
Electric Distribution	$197.3		$173.8		$23.5		$0.61
Electric Transmission	107.5		109.5		(2.0	)	0.33
Natural Gas Distribution	(17.1	)	(12.6	)	(4.5	)	(0.05	)
Water Distribution	17.5		17.6		(0.1	)	0.06
Eversource Parent and Other Companies	13.7		1.1		12.6		0.03
Reported Earnings	$318.9		$289.4		$29.5		$0.98

Nine months ended:

(in millions, except EPS)	September 30, 2019		September 30, 2018	Increase/ (Decrease)		2019 EPS1
Electric Distribution	$422.7		$379.3	$43.4		$1.32
Electric Transmission	342.8		329.6	13.2		1.07
Natural Gas Distribution	57.6		50.2	7.4		0.18
Water Distribution	26.3		26.3	---		0.08
Eversource Parent and Other Companies	14.0		16.3	(2.3	)	0.04
NPT impairment charge	(204.4	)	---	(204.4	)	(0.64	)
Reported Earnings	$659.0		$801.7	($142.7	)	$2.05

Retail sales data:

Three months ended:	September 30, 2019	September 30, 2018	% Change
Electric Distribution (Gwh)
Traditional	2,078	2,206	(5.8	%)
Decoupled	12,261	13,110	(6.5	%)
Total Electric Distribution	14,339	15,316	(6.4	%)
Natural Gas Distribution (mmcf)
All Decoupled	11,557	11,342	1.9	%
Water Distribution (MG)
Traditional	695	732	(5.1	%)
Decoupled	6,961	7,118	(2.2	%)
Total Water Distribution	7,656	7,850	(2.5	%)

Nine months ended:	September 30, 2019	September 30, 2018	% Change
Electric Distribution (Gwh)
Traditional	5,803	5,981	(3.0	%)
Decoupled	33,298	34,690	(4.0	%)
Total Electric Distribution	39,101	40,671	(3.9	%)
Natural Gas Distribution (mmcf)
All Decoupled	74,915	73,325	2.2	%
Water Distribution (MG)
Traditional	1,604	1,684	(4.8	%)
Decoupled	16,173	16,491	(1.9	%)
Total Water Distribution	17,777	18,175	(2.2	%)

Eversource Energy has approximately 324 million common shares outstanding and operates New England’s largest energy delivery system. It serves approximately 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 6, 2019, beginning at 9 a.m. Eastern Time. The webcast and associated slides can be accessed through Eversource Energy’s website at www.eversource.com.

¹All 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 common shareholders of each business by the weighted average diluted Eversource Energy common shares outstanding for the period. Earnings discussions also include a non-GAAP financial measure referencing 2019 earnings and EPS excluding the impairment charge for the NPT project.

Eversource Energy uses these non-GAAP financial measures to evaluate and provide details of earnings results by business and to more fully compare and explain 2019 results without including the impact of the NPT impairment charge. Management believes the NPT impairment charge is not indicative of Eversource Energy’s ongoing performance. Due to the nature and significance of the impairment charge on net income attributable to common shareholders, management believes that the non-GAAP presentation is a more meaningful representation of Eversource Energy’s financial performance and provides additional and useful information to readers in analyzing historical and future performance of the business. Non-GAAP financial measures should not be considered as alternatives to Eversource Energy’s 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. Generally, 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 involve risks and uncertainties that may cause actual results or outcomes to differ materially from those included in the forward-looking statements. Factors that may cause actual results to differ materially from those included in the forward-looking statements include, but are 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, except as required by federal securities laws, and 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, 2019				As of December 31, 2018
ASSETS
Current Assets:
Cash	$	22,688			$	108,068
Receivables, Net	993,396				994,055
Unbilled Revenues	150,394				176,285
Fuel, Materials, Supplies and REC Inventory	204,012				238,042
Regulatory Assets	538,162				514,779
Prepayments and Other Current Assets	312,253				260,995
Total Current Assets	2,220,905				2,292,224
Property, Plant and Equipment, Net	26,911,877				25,610,428
Deferred Debits and Other Assets:
Regulatory Assets	4,292,560				4,631,137
Goodwill	4,427,266				4,427,266
Investments in Unconsolidated Affiliates	861,687				464,286
Marketable Securities	404,804				417,508
Other Long-Term Assets	606,295				398,407
Total Deferred Debits and Other Assets	10,592,612				10,338,604
Total Assets	$	39,725,394			$	38,241,256
LIABILITIES AND CAPITALIZATION
Current Liabilities:
Notes Payable	$	712,500			$	910,000
Long-Term Debt – Current Portion	853,066				837,319
Rate Reduction Bonds – Current Portion	43,210				52,332
Accounts Payable	892,106				1,119,995
Regulatory Liabilities	441,189				370,230
Other Current Liabilities	806,839				823,006
Total Current Liabilities	3,748,910				4,112,882
Deferred Credits and Other Liabilities:
Accumulated Deferred Income Taxes	3,604,791				3,506,030
Regulatory Liabilities	3,644,477				3,609,475
Derivative Liabilities	357,869				379,562
Accrued Pension, SERP and PBOP	821,172				962,510
Other Long-Term Liabilities	1,290,704				1,196,336
Total Deferred Credits and Other Liabilities	9,719,013				9,653,913
Long-Term Debt	13,440,165				12,248,743
Rate Reduction Bonds	540,122				583,331
Noncontrolling Interest – Preferred Stock of Subsidiaries	155,570				155,570
Common Shareholders' Equity:
Common Shares	1,699,292				1,669,392
Capital Surplus, Paid In	6,675,889				6,241,222
Retained Earnings	4,100,220				3,953,974
Accumulated Other Comprehensive Loss	(52,017		)		(60,000		)
Treasury Stock	(301,770		)		(317,771		)
Common Shareholders' Equity	12,121,614				11,486,817
Total Liabilities and Capitalization	$	39,725,394			$	38,241,256

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)	2019				2018				2019				2018
Operating Revenues	$	2,175,797			$	2,271,425			$	6,476,084			$	6,413,243
Operating Expenses:
Purchased Power, Fuel and Transmission	730,255				842,291				2,326,041				2,442,953
Operations and Maintenance	331,054				344,475				994,660				970,881
Depreciation	222,599				208,671				656,632				612,077
Amortization	73,854				92,711				183,760				174,108
Energy Efficiency Programs	136,832				129,965				382,785				366,162
Taxes Other Than Income Taxes	171,965				187,291				537,636				547,155
Impairment of Northern Pass Transmission	—				—				239,644				—
Total Operating Expenses	1,666,559				1,805,404				5,321,158				5,113,336
Operating Income	509,238				466,021				1,154,926				1,299,907
Interest Expense	135,216				125,201				399,654				372,734
Other Income, Net	26,968				16,718				103,818				100,656
Income Before Income Tax Expense	400,990				357,538				859,090				1,027,829
Income Tax Expense	80,226				66,278				194,435				220,497
Net Income	320,764				291,260				664,655				807,332
Net Income Attributable to Noncontrolling Interests	1,880				1,880				5,639				5,639
Net Income Attributable to Common Shareholders	$	318,884			$	289,380			$	659,016			$	801,693
Basic Earnings Per Common Share	$	0.98			$	0.91			$	2.06			$	2.53
Weighted Average Common Shares Outstanding:
Basic	324,037,169				317,360,110				320,442,253				317,367,252
Diluted	326,008,342				317,967,311				321,570,926				317,948,498

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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