Eversource Energy (D/B/A)

Hello and welcome to the Eversource Energy Q4 and full year 2023 earnings call. My name is Elliot and I'll be coordinating your calls today. If you would like to register a question during today's event, please press star followed by one on your telephone keypad. I'll now like to hand over to Bob Becker, Director for Investor Relations. The floor is yours. Please go ahead.

Good morning and thank you for joining us. I'm Bob Becker, Eversource Energy's Director for Investor Relations. During this call, we'll be referencing slides we posted yesterday on our website. And 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 to GAAP results is contained within our news release, the slides we posted last night, and in our most recent 10-K and 10-Q. Speaking today will be Joe Nolan, our Chairman, President, and Chief Executive Officer, and John Marrera, our Executive Vice President and CFO. Also joining us today is Jay Booth, our Vice President and Controller. Now, I will turn the call over to Joe.

Thank you, Bob, and thank you all for joining us on the call this morning and for your interest in Eversource. Let me begin with the pathway for a full exit of our offshore wind business on slide four. When we started down this path in 2016, we were very excited for the opportunity to bring much needed renewable energy to our region. The high supply prices in the Northeast are not good for anyone, particularly our customers. Until we can reduce the region's reliance on gas-fired electric generation, price volatility will continue to cause difficulties for our customers. State mandates for offshore wind procurement provided a strong impetus for our engagement along with the recognition that offshore wind is one of the few renewable resources that can be produced in quantity to reduce reliance on natural gas and dampen the volatility of our region's electric prices. Unfortunately, our offshore wind investment experienced difficulties as early stage projects. These difficulties were largely a result of the pandemic, supply chain disruptions, rising interest rates, and uncertainty around available resources for installation vessels and fabrication of turbine foundations. We are not alone, as several other offshore wind developers have also experienced similar challenges. These challenges, coupled with the lack of pricing flexibility inherent in contracts approved by state regulators, resulted in projected investment returns substantially below our required thresholds. At the same time, our core business is well positioned to deliver solid operational and financial results as we move forward in supporting the region's transition to a cleaner energy environment. This led us to seek out a path to refocus our investment portfolio on our utility business with its strong opportunities for growth. For this reason, I am pleased about our announcement that we have reached an agreement to sell our existing 50% interest in the South Park and Revolution Wind projects to Global Infrastructure Partners, a leading infrastructure investor that will generate approximately $1.1 billion of cash proceeds. With the pending sale to GIP, our announcement last month regarding the conditional sale of Sunrise Wind to Orsted, and the sale of the offshore wind lease area that closed last year, I'm pleased to say that we have the pathway in place to finalize a full exit from the offshore wind business. For the year, we have taken a non-cash cumulative impairment charge of approximately 1.95 billion after tax. John will discuss the impairment in more detail. However, I will say that the impairment reflects assumptions that our board views as appropriate given the uncertainty around the ultimate outcome of the Sunrise Wind Rebid process. As John will discuss, The terms of the agreement with GIP are assumed and reflected in the impairment charge in our long-term financing plan. By taking this impairment charge, we are accounting for our full exit from offshore wind. We are pleased to be in the final stage of this long journey, and we feel confident that we are turning over the reins of the wind business to capable and committed parties. We will remain involved in managing onshore construction for all three projects and through our tax equity investment in South Fork. I'll close my comments on offshore wind with a brief update on the status of the project construction activity. As the first utility scale offshore wind farm in commercial operation in the U.S., South Fork Wind has been supplying power to Long Island since late November 2023, when the first turbine was installed. We are now in the process of installing the 12th and final turbine. We expect all turbines to be reducing power by March. We continue to advance on both onshore and offshore construction of Revolution Wind after reaching a positive final investment decision in October of last year. Work on the site of the new onshore substation in Rhode Island has been underway since late last year. Seabed preparation for the installation of wind turbine foundations is currently in process. Lastly, on Sunrise Wind, we continue to get closer to the BOEM's record of decision while we await the results of the latest submission into New York's RFP4. We made this submission jointly with Orsted on January 25th. Next, let me discuss the water distribution announcement we made last evening, shown on slide five. Our water business is a valuable, well-performing, and well-managed company. Although the water business is earnings accretive to Eversource, we see the potential sale of our water business as an opportunity to reduce equity needs and improve our regulatory diversity. With its current $1.3 billion rate base and a national reputation for operational excellence, the water business has a strong potential to be of substantial value to another owner as part of a larger water business or strategic infrastructure platform. As a result, we plan to launch a process for evaluating market interest in a transaction for the water business with the objective of delivering value to both customers and investors. If successful, the proceeds from the sale will provide a source of cash without going to the equity market, thereby enhancing our balance sheet. Moving forward, Eversource will focus on the delivery of clean, safe, reliable energy to our customers and preparing for the clean energy future that our states, our customers, and our investors expect. Now I'll turn to our excellent financial and operating performance results on slide six. Starting with the financials, we delivered another strong year with reoccurring earnings of $4.34 per share in 2023, representing growth of nearly 6% over 2022. Our board has approved a dividend increase for the first quarter of 2024 of 71.5 cents per share, which amounts to $2.86 per share on an annualized basis. This reflects an increase of 6% over 2023's dividend level. Moving to operations, I am extremely proud of our team, once again, for delivering reliable electric natural gas and water service to our 4.4 million customers. As you can see, our electric reliability ranks in the top decile among our peers. We're focused on providing reliable electric service to our customers, who on average have gone nearly two years without an outage. In 2023, Eversource again outperformed its target injury rate. Our teams are keeping a strong focus on safe work practices, not just during major storm events when conditions are tough, but every day on every job. On natural gas safety, once again the team delivered another strong year, replacing 145 miles of natural gas pipeline and delivering on-time emergency response times of 98% within 45 minutes, a performance that well exceeds our regulatory requirements. I want to congratulate the Eversource team on these accomplishments. I am very proud of the skill and commitment of the entire team in the way that our employees are aligned in our shared vision of providing the highest level of safety, innovation, service quality, and financial discipline for the benefit of our customers. Turning to slide seven, At Eversource, we know our customers expect us to not only deliver energy today, but also to be prepared for the future. To that end, we are actively engaging with our states to enable the clean energy future that our customers and our communities envision. At the end of January, we submitted our electric sector modernization plan, or ESMP, to the Massachusetts Department of Public Utilities. after extensive input from the Grid Modernization Advisory Council and stakeholders across the Commonwealth. The ESMP is the roadmap for building out the electric infrastructure and technology platforms to enable a reliable transition to a clean energy future in alignment with the state's clean energy plan. The filing specifically addresses the coming five and ten years with a vision toward an 85% reduction in greenhouse gas emissions by 2050. Eversource has taken a leadership role in this endeavor and is viewed as a trusted partner at the table in planning the clean energy future for Massachusetts. We expect the Department of Public Utilities to issue a final decision on our plan in August of 2024, addressing approximately $600 million of proposed incremental investment among other components. In Connecticut, we are continuing to work on our comprehensive outreach plan with participation from across the company. We are leveraging our internal talent to educate Connecticut stakeholders on the importance of infrastructure investment to our customers and the broader Connecticut economy, as well as the affordability programs that we offer to customers. This approach has proven to be productive in terms of raising awareness on the value of utility investment and on the point that Eversource is the partner that is ready, willing, and able to help Connecticut meet its clean energy goals. Lastly, in New Hampshire, we are gearing up for a number of regulatory initiatives, including a potential PBR proposal in evaluating ways to help the state advance clean energy projects such as large-scale solar development. We're excited about the role Eversource will continue to play to enable a clean energy future that's affordable and equitable for all customers. We'll continue to engage with all stakeholders to move this massive, complex effort forward. Turning to slide eight, as you may know, Eversource is an industry and market leader in environmental, social, and governance. We continue that focus in 2023. We expanded the charter of the board's governance, environmental, and social responsibility committee to extend its oversight to include climate-related matters. The full board received regular reports on our climate-related goals, key industry updates, and policy activity through the Eversource climate scorecard. We continue to make progress on reaching our carbon neutrality goal by 2030, and we submitted our application for a new science-based target in December. I'm pleased to report that due to our continued leadership on ESG, last week Ebersource was named one of America's most just companies, as announced by Just Capital and CNBC. for the fifth consecutive year. We have a very exciting future here at Eversource, focused on what we do best. I will now turn the call over to John Marrero.