Good day, and thank you for standing by. Welcome to the Eversource Energy Q4 and Year End 2024 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Rima Hyder, Vice President of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today on the fourth quarter and year-end 2024 earnings call for Eversource Energy. During this call, we'll be referencing slides that we posted this morning on our website. As you can see on slide one, some of the statements made during this investor call may be forward-looking. These statements are based on management's current expectations and are subject to risk and uncertainty, which may cause the actual results to differ materially from forecasts and projections. We undertake no obligation to update or revise any of these statements. Additional information about the various factors that may cause actual results to differ and our explanation of non-GAAP measures and how they reconcile the GAAP results is contained within our news release and the slides we posted this morning in our most recent 10-Q and 10-K. Speaking today will be Joe Nolan, our Chairman, President, and Chief Executive Officer, and John Moreira, our Executive Vice President, Chief Financial Officer, and Treasurer. Also joining us today is Jay Booth, our Vice President and Controller. I will now turn the call over to Joe.

Thank you, Rima, and good morning, everyone. Thank you for joining us today for our year-end earnings call. It is my great pleasure to report on another year of success and growth at Eversource. Our fiscal year 2024 closed with strong results in three main areas of focus. First, providing top-tier electric, gas, and water service to our valued customers. Second, delivering steady and stable financial results, with earnings per share up 5.3% year-over-year, exceeding the midpoint of our revised guidance. And third, strengthening our balance sheet, all reflecting our commitment and dedication to delivering exceptional value to our customers and shareholders. Starting with Slide four, let me take you through some of our 2024 accomplishments. Throughout the year, we've faced numerous challenges, but our unwavering focus on customers remains at the forefront of everything we do. Customer trust and satisfaction are paramount to us, and we've implemented several initiatives to enhance their experience and ensure we meet their needs. From hardening infrastructure to withstand severe weather conditions to introducing innovative customer service solutions, we've made significant progress in strengthening our relationship with our customers and key stakeholders. Strengthening our balance sheet was a top priority for us in 2024 and will remain a key focus area for us in 2025. We made progress toward improving our FFO to debt ratio through constructive rate outcomes, successfully issuing $1 billion of equity through our ATM program, exiting the offshore wind business, and as you recently saw, entering into an agreement to sell Aquarion Water at an attractive multiple of 1.7 times rate base. We were thrilled to announce the CEO of this truly exceptional business. Its unique value and strategic importance made it a key asset in our portfolio. Under Eversource's ownership, we built on Aquarion's long-standing track record of superior…

Thank you, Joe, and good morning, everyone. This morning, I will discuss the details of the Aquarion sale, review 2024 earnings results along with a regulatory update, share our updated five-year capital investment plan, and provide our 2025 EPS guidance, the five-year financing plan, and our long-term earnings growth expectation. Let me start on slide ten with a discussion of the details of the pending sale of Aquarion. As Joe mentioned, we are very pleased to have signed an agreement to sell this valuable asset. As we stated in the press release at the end of January, the aggregate enterprise value of the sale is approximately $2.4 billion. This includes approximately $1.6 billion in cash and approximately $800 million of net debt that we will extinguish at the closing. The aggregate value represents a multiple of 1.7 times 2024 rate base and is approximately 35 times expected 2025 earnings. This strong valuation will enable us to reduce parent company debt and thereby further strengthen the balance sheet. We expect to file change of control applications in all three states within the next thirty to forty-five days and anticipate a closing in late 2025. Now I'll review the 2024 results. As shown on slide eleven, our GAAP results for 2024 earnings of $2.27 compared with a GAAP loss of $1.26 per share in 2023. Results for 2024 include an aggregate net after-tax loss of $2.30 per share, related to closing the sales of our offshore wind investment, recognized in the third quarter, as well as the expected loss on the pending sale of Aquarion. As a reminder, results for 2023 included an aggregate after-tax loss of $5.60 per share that primarily related to losses on offshore wind investments. Excluding those after-tax losses, our non-GAAP earnings were $4.57 per share in 2024…

Thank you, John. I am immensely proud of our team's dedication and commitment to excellence, which has yielded a strong performance this past year. As we look ahead, we remain focused on our strategic priorities, enhancing operational efficiency, investing in regulated opportunities, and delivering value to our shareholders and customers. I'll now turn it back over to Rima to begin the question and answer session.

Thank you, Joe. Lisa, we're ready now for the Q&A session.

Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. You will hear an automated message advising your hand is raised. We also ask that you limit yourself to one question and one follow-up. One moment while we compile the Q&A roster. Our first question today will be coming from Shahriar Pourreza of Guggenheim. Your line is open.

Hey, guys. Good morning.

Morning, Shahriar.

Morning, Joe. Morning, John. Joe, let me just start off with Connecticut if it's okay. There's obviously a lot of back and forth to kick off the legislative session. Seems to be some bipartisan support at this point for an expansion of PURA. Do you support three or five commissioners? And what do you see as the pathway forward from here for the broader set of reforms like making PURA independent, deep, tweaking the public benefits, etcetera? Thanks.

Yeah. So, you know, the current law, as you know, Shahriar, calls for five commissioners. We don't have a position either way, whether it's three or five. From our perspective, we just want a fair, transparent, and lawful process. That's all we've ever asked for. You know, right now, what we know is similar to what you know. That to date, the governor has nominated the chair Marissa Gillette and David Arconti to serve as PURA commissioners through March of 2028. Under the Connecticut law, nominees must appear before the joint executive nominations committee for a hearing. In their executive nomination reports out to the house and the senate, which is typically a four-four vote. As of today, the process is pending, and no date has been set for that exact nominations hearing. So we are awaiting the same news as everyone else in terms of what the schedule looks like. But, again, we are indifferent on whether it's three or five. We just want to be treated fairly.

Got it. Hopefully, we get some positive changes there. John, just I know just a quick one for you. I know we're getting this credit question this morning. It's putting a little bit of pressure on the shares. But I guess what's the FFO to debt target for 2025-2029? Sounds like there's a change versus the previous 14% to 15% target. What are you embedding in that $1.2 billion of equity for CT storm recovery? All of it, none of it? Thanks.

Sure. Sure. First, let me start by saying really, nothing has changed. As I shared with you in slide seventeen in my presentation, you can see that all of those major cash flow enhancements are still intact from what we previously shared with you. We have now added the $1.6 billion that we anticipate receiving from the Aquarion later this year. So in addition to that, in the formal remarks that I made this morning, I've indicated that our expectation is that we should see a significant improvement. And I said, in my formal remarks, nearly a 50% increase in cash flows from operation. It's primarily driven by the regulatory deferrals coming in, which includes very little of storms in 2025. So to answer your question on the longer-term perspective, yes, we have a sizable portion of those storm costs coming in throughout the forecast period, which has led to the determination of our equity needs at that $1.2 billion. So but going back to your note, it's FFO to debt over the Moody's downgrade threshold. Right now, as you know, Moody's is the only one that has us on negative outlook. So my focus is going to continue to improve that and hopefully get that outlook to a more stable setting than where we are right now. So continue to be very laser-focused on maintaining a very healthy FFO to debt ratio.

Okay. Perfect. Appreciate it, guys. Thanks so much. I'll see you soon.

Thank you.

Thank you. One moment for the next question. The next question will be coming from the line of Carly Davenport of Goldman Sachs. Your line is open.

Hey. Good morning. Thanks so much for taking my questions.

Morning, Carly.

Maybe just to stick on the sort of balance sheet and financing point, appreciate the comments on the equity financing. Just as you think about the timing and methodology, I know you said back half of the plan, but would you expect that to be put a new ATM program in place as you kind of work through the initial $1.3 billion? Or do you see potential to execute more from a block sale perspective as you reach the latter parts of the plan?

Thank you, Carly. Very good question. We've been very, very pleased with the ATM program. I love the fact that we can control our destiny as to when we go to the market. You should expect us to use that vehicle to accommodate our future equity needs.

Got it. Great. That's helpful. Thank you. And then maybe just as you think about the potential for that $1.5 billion to $2 billion of incremental investments on top of the new five-year plan, how should we think about the potential timing of some of those buckets coming into play here?

Well, the biggest component of that incremental investment opportunity is Connecticut AMI. And we continue to await PURA's action as they reconsider the final decision. So we don't have a date as to when that proceeding is going to happen. But I would say that certainly, you can expect something hopefully later this year, some guidance there. And then I think the bulk of it, the remainder piece of that, you should see more transparency in the coming twelve to eighteen months.

Great. Thanks so much for the call.

Thank you, Carly.

Thank you. One moment for the next question, please. The next question will be coming from the line of Steve Fleishman of Wolfe. Your line is open.

Hey. Good morning. Thanks for the updates. I don't know. My phone might have gone out just briefly there. Just on did you actually give an FFO to debt number target in the answer to the question before? My phone went out for, like, ten seconds.

Yeah. I did not give a target, and I'm not gonna give a target other than to say that we are trying to get to a better position, change the negative outlook at Moody's to more stable in the coming months. And right now, our downgrade threshold at Moody's is 13%. And, Steve, what I said is our financing plan provides with a $1.2 billion of equity over the five-year period. We are very solidly above that 13% level.

Okay. And where did it end up at for end of 2024?

Yeah. We landed in, I would say, in the low double digits between, like, ten and a half, eleven.

Okay. And then on could you you didn't really talk at all about Revolution. And you know, there was, like, nuance on Orsted's call where they had said it was had previously said it would be on by 2026, and then they said second half of 2026. Did anything really change there, or is it still on the same timeline that it was?

Yeah, Steve. You know, nothing has changed on Revolution. You know, we continue to make great progress. You know, they just defined that second half of 2026, but I will tell you that the twentieth turbine is being loaded now at New London. We're making great progress. We feel very good about executing there.

And you don't see anything, like, in your K or anything where you'd have to take another write-off there?

No. No. We're filing our 10-K. We issued we released earnings, as you know, and we're filing our 10-K hopefully, by Friday.

Great. And then I know you filed the lawsuit recently in Connecticut about the actions of PURA. Just is there, like, a timeline on that lawsuit to be decided or?

There's no timeline for the court to act. You know, we have asked superior court along with Avangrid. We filed this complaint just looking for transparency from PURA around orders that come out of the department. So, no, we do not have any timeline as to when the court will make a decision around that.

Thank you. And one moment for the next question. And our next question will be coming from the line of Bill Apicelli of UBS. Your line is open.

Good morning, Bill. Just a follow-up question there on some of the cash flow items. So you mentioned the minimal cash tax payments through 2028. Can you just maybe expand upon that and on what's driving that?

Sure. As I've mentioned previously, you know, we've had some nice tax credits that we've been able to utilize. We took advantage of that in 2023, took advantage of that in 2024, there is a bit more that we will take advantage of in 2025. So we really have tapped into the South Fork ITC bucket yet. So when you look at what we've taken and what is yet to be taken, that probably puts us at a very minimal tax cash payer between now and 2028.

Okay. And I guess the other credits that you've utilized ahead of the South Fork is what are they?

R&D related tax credits. And the way you should think about it on a normal basis, our tax obligation would be around $150 to $170 million annually. So you can see that if you take that divided by the $500 million that we have available for ITC, that would likely get us through certainly 2027 and, you know, we think that there's an opportunity to continue to harvest that into 2028. So that's the primary driver.

Okay. And then when we think about the 5% to 7% growth rate, obviously, the guidance for this year is somewhat below that, but can you just sort of outline the drivers of some of the acceleration to get you back in that 5% to 7% as we think of, you know, into 2026 and 2027 and 2028?

Sure. One I've already spoken to, and that is singing on the recovery of deferred storm costs. Right now, we have $2 billion on our balance sheet. Over this forecast period, I'm hoping that we get substantially all of that in the door. And that's part of our financing plan. And then as I also mentioned in my formal remarks, you know, recovery of our investments through constructive rate mechanisms in place as we continue to expand to help the states meet their energy objectives. Part of that is in Massachusetts with the ESMP, which we are executing. As you know, we just broke ground last month on the Cambridge underground substation. A lot of that time, a lot of that spend is happening within this forecast period. However, the in-service will be towards the tail end of our forecast period. So it's timely recovery in our O&M. You know, 2024 was, you know, a pretty healthy O&M year. And the last one, which, you know, we continue to be extremely focused on, and that's offloading debt. Offloading our holding company debt. I mentioned that my expectation is we're not we will not be in the debt capital markets this year for the holding company. They have $600 million of maturities that are coming due this year. Actually, half of that has already happened. And the remaining $300 million will happen in August. So the use of the cash proceeds from the Aquarion sale will significantly drive that. So that's our growth in our CapEx plan that I just we just rolled out this morning. All of those components will help gain momentum to continue to build upon that 5% to 7% growth rate.

Okay. Alright. Thank you very much.

Thanks, Bill.

Thank you. One moment for the next question. Our next question will be coming from the line of Durgesh Chopra of Evercore. Your line is open.

Good morning, Durgesh.

Morning, Joe and John. Thank you for taking my questions. I have two just as I think about 2025, John, right, this is, you know, year over year is 4% growth below the target. And I do the math on your equity issuance. It's about ten cents, the amount of equity you issued in 2024. Is that really the driver? I guess what I'm asking you is if you because you front-run that equity, you're below that 5% to 7%. Absent that, you would have been in that 5% to 7% range. Is that the right way to think about it, or were there other pieces like the?

Durgesh, you're absolutely right. I mean, as I mentioned in my formal remarks, you know, the equity that we issued is the that who is to our 2025 earnings. So and you're in the, you're in the ZIP code in that quantification. But I think, you know, one of the things I don't want to highlight you all is your Aquarion sale is gonna bring in $1.6 billion of cash. I'm really not gonna get the full benefit of that in 2025 because of when we get when we expect the close. And so the full value of that cash utilization is gonna happen in 2026. So it's a combination of the dilution, and I'm not able to offload $1.6 billion of debt and enhance my interest expense.

Got it. Okay. And then just on that interest expense topic, just as you think about your long-term growth rate, what are you modeling for interest rates? Are you modeling, you know, the current rate levels, or do you see interest rates going up maybe just help us with the thought process there?

You know, I think, you know, as we always do, we look at multiple consensus that in the market, and I'm very comfortable with what we have assumed in 2025 and beyond.

Okay.

It does again, it does assume that, you know, the feds won't move in the right direction.

Well, I hope they do. Okay. Thank you.

Thank you. One moment for the next question. And our next question will come from the line of Ross Fowler of Bank of America. Your line is open.

Morning, Ross.

Morning, Ross.

Morning, Joe. Morning, John. So just a couple of questions on a couple of things at the state level that are happening. In Massachusetts, we've seen the DPU has put out this proposal to end most gas line extensions. Does that shift your capital plan sort of under the surface away from gas and more towards electric? Or are you kinda already doing that in anticipation of things like this coming as you go through the full electrification runway in that state? And then the follow-on to that is how do you think about customer bill impacts as we switch from, you know, less gas service going forward should this proposal be accepted towards more electric heating service in the future?

Yeah. You know, this is so it literally just came out, and we're actually gonna provide comments to it. So I think it'd be premature right now to kinda have any discussion around that as we formulate our response to the DPU.

Okay. Fair enough, Joe. And then, I guess, there's some legislative efforts in Connecticut to talk through or at least think about the statutory changes that were made around the Aquarion sale. How do you contextualize the risks related to that or, you know, have they actually moved forward with legislation there?

Yeah. You know, like every legislative arena, there are hundreds and hundreds of bills that are filed. This happens to be one there. Obviously, we will be active in that proceeding. But, you know, keep in mind that this legislative body is the one that enacted the law, you know, not even, you know, seven months ago that, you know, it allowed this particular buyer to bid. So, you know, we feel confident that things are on track there, and the governor did sign that. So, you know, we'll obviously play an active role, but I'm not concerned about that at this point.

Okay, Joe. Fair enough. And then, John, maybe if I can squeeze in one for you. Picking at some earlier questions and just trying to get a fine-tune the detail on slide seventeen on the cash flow. So if I think about that green box to the right of beyond 2025, would it be fair to say, you know, equity, we know kind of what you've given us that's the $1.2 billion towards the end of the plan plus the DRIP and employee programs. Then I can kind of get my head into an assumption of what deferred storm cost recovery looks like and what, you know, distribution investment incremental looks like. So if I take sort of your 13% FFO to debt, I can sort of back into what you're assuming from rate increases. Would that be fair?

That's a fair assumption. Correct.

Okay. Perfect. Thank you, guys.

Thanks a lot. Have a good day.

You too.

One moment for the next questions. And the next question is coming from the line of Jeremy Tonet of JPMorgan. Your line is open.

Morning, Jeremy.

Hi. Good morning.

Hey, Jeremy.

Just wanna dive into 2025 EPS a little bit more if I could and just headwinds and tailwinds there. What you see for headwinds and how do you think about, I guess, billing, the twelve cents of Aquarion earnings, in kind of growth within the plan.

Well, for 2025, let me be clear. We are assuming the Aquarion earnings up to the expected closing date. So which is a good portion of the year.

Okay. Got it. Didn't know if that was moving to disc ops.

No. It's not moving to discontinued ops. No.

Got it. Okay. I guess in the subsequent year, thinking about offsetting that headwind just everything as you're waiting for the plan. Anything else explicitly? Just trying to get a feeling for the shape of the earnings trajectory as the Aquarion rolls off.

Yeah. I mean, I think it's important to keep in mind that when Joe and I made the decision to sell Aquarion, that represented a very accretive transaction for us. So having the $1.6 billion to offload some of the interest, that should more than replace the earnings from Aquarion. And as I've said, that benefit will happen in 2026.

Got it. Okay. Alright. Thank you. I'll leave it there. Thanks.

Thanks, Jeremy.

Thank you. One moment for the next question. And the next question will come from the line of Andrew Weisel of Scotiabank. Please go ahead.

Morning, Andrew.

Hi. Good morning. Thank you for taking my question. First one on Mystic. It seems like a great opportunity with a lot of flexibility, a lot of optionality. I guess my question is, what do you think about where what that might become, and what are the odds it might turn into a sizable investment opportunity something that might be in the billion-plus dollar range? And is that included in your CapEx plan?

No. It's not.

Okay. Yeah. And if I think yeah. Just so we'd be perfectly I mean, we just acquired the property in December. So our planning organization is going through and looking at the opportunities, seeing what RFPs potentially can materialize. So it's really broad. We're very excited about that prospect. It gives us tremendous flexibility from a strategic location for not just for Massachusetts, but for New England. Okay. I think that's important. So we'll have to see, as these opportunities come about as to what we what that would entail. It could materialize within this forecast period, but likely more beyond. I think it's also important to recognize that adjacent to that possible plan, we currently own a very critical substation that's on the drafting table that we need to modify and upgrade to accommodate the slope requirement. So still too early in the process to put anything in our not plan.

Okay. Would you be comfortable making a billion-dollar plus investment there?

Oh, we certainly would feel very comfortable here not only for the FERC regulated assets as well as the regulatory climate we enjoy here in Massachusetts. So both of those are the proper formula for us to make investment decisions of that nature. Yes.

Okay. Great. And then just to clarify one other financing one. The dividend reinvestment and the employee compensation programs I see 1.3 million shares in 2024. Can you just give round numbers what we should expect for 2025 and beyond, whether in shares or dollars or both?

I think you should assume that to go up slightly. You know, the guidance that we've given is around $100 to $120 million on an annual basis of cash savings of value.

Okay. Very good. Thank you so much.

Alright, Andrew.

Thank you. One moment, please. And our last question for the day will be coming from the line of Angie Storozynski of Seaport. Your line is open.

Thank you for holding, ma'am. Thank you. Hi, Angie. Thanks for squeezing me in. Hello. So I just one question about Aquarion. So clearly, a very strong outcome of the sale process. Just wondering given that this transaction needs to be approved by PURA, if you are anticipating any roadblocks there, you know, especially as far as the other customer benefit is concerned. It's just, you know, when I think about it, so a municipal utility, it's hard to see any meaningful cost efficiencies or, you know, there's obviously that issue of taxes as well, which I understand can be replaced by the payments in lieu of taxes. But I'm just again, wondering the regulatory standard for approvals of deals like that.

Sure. I mean, we feel very good about the regulatory process. You know, as long as the laws have followed, we feel comfortable that this transaction will be approved. And with regard to tax for cities and towns, the fact of the matter is the rates currently include taxes for every one of those cities and towns, so there's no reason going forward that this authority is not able to pay those taxes to those communities. And that's something that we think is very, very important.

Okay. Thank you.

Thanks, Angie.

Thank you. And I would like to now turn the call back over to Joe Nolan for closing remarks.

Thank you. I appreciate everyone joining us today for the Eversource Energy earnings call. We are excited about our progress and the strong foundation we have set as we look ahead to 2025. We remain dedicated to delivering value to our customers, investors, and the communities we serve while continuing to advance our commitments to innovation and sustainability. Thank you, and have a great day.