Eversource Energy Outlines Growth Path Amid Funding Strain
Eversource Energy ((ES)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Eversource Energy struck a cautiously optimistic tone on its latest earnings call, pointing to solid recurring earnings growth, robust capital deployment, and improving credit metrics while also acknowledging real near‑term pressures. Management stressed that regulatory timing, segment softness, and sizable financing needs are manageable and laid out a detailed plan to fund growth and protect the balance sheet.
Stronger earnings on GAAP and non‑GAAP basis
Eversource reported 2025 non‑GAAP EPS of $4.76, up about 4.2% from $4.57 in 2024, with GAAP EPS jumping to $4.05 from $2.27 as one‑time charges eased. Fourth‑quarter EPS of $1.12 on both a GAAP and non‑GAAP basis improved from $0.20 GAAP and $1.01 non‑GAAP a year ago, underscoring healthier underlying profitability exiting the year.
Dividend growth underpins shareholder returns
The board lifted the annual dividend to $3.01 per share in 2025, a 5.2% year‑over‑year increase that aligns with the company’s mid‑single‑digit earnings growth ambition. Management framed the payout as a central part of total shareholder return, signaling confidence in cash generation even as capital needs rise.
High reliability and resilient operations
Operationally, Eversource highlighted top‑decile performance on reliability metrics such as MAIFI and SAIDI, with customers on average seeing an outage only once in nearly two years. The company said its grid performed well through major weather events, reinforcing the case for ongoing investments in resiliency and modernization.
Elevated capital plan for the next decade
Capital spending topped $4.0 billion in 2025, and Eversource raised its 2026–2030 plan to $26.5 billion, $2.3 billion above the prior outlook. The program allocates over $11 billion to electric distribution, nearly $7 billion to gas distribution, and more than $7 billion to transmission, with a $1.5 billion uplift over the prior plan in the 2026–2029 overlap.
Rate base expansion through targeted projects
Customer‑focused projects are expected to drive an 8.3% rate base increase from 2024 through 2030, supporting future earnings growth. Flagship initiatives include the roughly $1.8 billion Cambridge underground substation and continued spending on grid hardening and modernization across the service territory.
Progress on AMI and grid modernization
Advanced Metering Infrastructure continues to roll out, with Massachusetts surpassing 100,000 smart meter installations to date. Remaining AMI deployment in the state plus potential upside from Connecticut AMI opportunities remain embedded in the long‑term capital plan and are seen as key to digital grid capabilities.
Offshore wind projects nearing critical milestones
On the offshore wind front, Eversource reported key milestones at Revolution Wind, noting the onshore substation is complete and the project is 87% finished. First power is expected within weeks, and despite cost scrutiny the company said there is no change to the contingent liability recorded in 2025 based on current estimates.
Constructive regulatory developments aid recovery
Management pointed to several regulatory wins that support cost recovery and customer affordability, including performance‑based rate adjustments in Massachusetts that add $55 million for NSTAR Electric and $10 million for NSTAR Gas. The company also highlighted mechanisms covering about 98% of its $2.0 billion deferred storm costs and a Massachusetts rate relief plan to help customers through peak winter bills.
Balance sheet strengthening and better credit metrics
Over the past year, Eversource improved its FFO‑to‑debt ratios by more than 400 basis points at Moody’s and about 300 basis points at S&P, reflecting higher cash flow and liability management. Management framed these gains as critical to funding a large capital pipeline at reasonable costs and maintaining access to multiple financing channels.
Long‑term earnings growth targets reaffirmed
For 2026, Eversource guided EPS to $4.80–$4.95 and reiterated a five‑year non‑GAAP EPS growth target of 5%–7% off 2025’s $4.76 base. The company aims to reach the upper half of that range by 2028, measured off 2027 results, signaling confidence that current headwinds will give way to a stronger growth trajectory.
Transmission earnings under pressure
Not all segments moved in the right direction, as electric transmission earnings fell to $2.09 per share in 2025 from $2.30 in 2024, about a 9.1% decline. Management indicated that while other businesses partly offset this drop, investors should expect some continued variability as regulatory frameworks and project timing evolve.
Rising costs weigh on certain results
Higher operations and maintenance expense, interest costs, depreciation, and property taxes all pressured 2025 results and remain a theme heading into 2026. The Parent and Other segment posted a deeper non‑GAAP loss of $0.22 per share versus $0.16 a year ago, largely due to increased interest expense at the holding company level.
Impact from one‑time charges and settlements
Special items also affected reported earnings, including a $12.2 million charge tied to an NSTAR Gas settlement with the Massachusetts Attorney General. Eversource recorded a separate $75 million GAAP net loss, or $0.20 per share, to reflect higher expected future obligations to a partner related to the earlier sale of offshore wind interests.
Large funding gap and financing strategy
The company laid out a five‑year cash need of $34.5–$35.0 billion, including $27.8 billion of infrastructure plus $6.7–$7.2 billion of dividends. With $24.2–$24.7 billion expected from operations, Eversource must secure $8.5–$9.0 billion in incremental debt and other financing, up to $1.5 billion of securitization proceeds, and $800 million–$1.1 billion of equity issuance.
Aquarion sale outcome remains a key swing factor
The planned sale of Aquarion Water remains uncertain, with regulators reviewing the transaction under a revised schedule and decisions expected in March. If the sale fails to close, management said it would turn to alternative funding tools and a rate case, noting that about $1.6 billion of assumed equity proceeds in its models were tied to the transaction.
Storm cost prudency and securitization timing risk
Recovery of Connecticut storm costs is another source of timing risk, with a prudency decision slated for mid‑year and securitization proceeds of up to $1.5 billion potentially delayed until around the third quarter of 2027. That lag would push out cash inflows and balance sheet relief, although most storm deferrals are already in rates or under review.
2026 framed as a transition year
The 2026 EPS outlook, while higher than 2025, is characterized as a transitional year as regulatory decisions, higher depreciation and taxes, interest expense, and share dilution weigh on growth. Management expects an earnings inflection beginning in 2027 as new projects enter rate base and financing measures start to bear fruit.
Guidance underscores growth ambition despite headwinds
Looking ahead, Eversource’s guidance hinges on executing a $26.5 billion 2026–2030 capital program and delivering 5%–7% annual non‑GAAP EPS growth from the 2025 base, with aspirations toward the high end by 2028. The company expects about 70% of its $34.5–$35.0 billion funding need to come from internal cash, supplemented by a mix of debt, equity‑like instruments, securitization, and moderate equity issuance as its strengthened credit metrics support access to capital.
Eversource’s latest call painted a picture of a utility balancing solid core operations and visible growth with genuine financing and regulatory challenges. For investors, the key takeaway is that management is leaning into capital investment and earnings growth while carefully managing leverage and cost recovery, making regulatory outcomes and funding execution pivotal catalysts over the next few years.
