BOSTON & HARTFORD, Conn. - Eversource Energy (NYSE: NYSE:ES) announced today the completion of its sale of 50 percent stakes in two offshore wind projects to Global Infrastructure Partners (GIP). The transaction, involving the South Fork Wind and Revolution Wind projects, culminated in adjusted gross proceeds of $745 million, a decrease from the expected $1.12 billion due to several factors including a delay in Revolution Wind's operational start date.
The sale reflects Eversource's strategic shift to focus on its regulated utility operations. Joe Nolan, Eversource's CEO, emphasized the company's ongoing commitment to the clean energy transition through its transmission expertise. The divestiture is part of Eversource's broader plan to strengthen its financial position, as outlined by CFO John Moreira, who mentioned an unaffected equity issuance plan and the company's target for a financial ratio used to gauge leverage.
Eversource anticipates a net loss of approximately $520 million from its offshore wind divestiture in the third quarter of 2024, which includes the sale of its interest in the Sunrise Wind project earlier on July 9, 2024. This loss accounts for a gain from the Sunrise Wind sale and additional costs and charges related to the Revolution Wind project. The majority of a $360 million liability included in the net loss is expected to be settled in 2026.
The final financial impact of the Revolution Wind project sale is subject to change based on several factors, including federal investment tax credits, actual construction costs, and the project's operational performance. Eversource will maintain a tax equity investment in South Fork Wind but has no further financial obligations for the Sunrise Wind project following its sale.
Eversource engaged Goldman Sachs for financial advisory and Ropes & Gray LLP for legal counsel regarding the transaction. The company, known for its corporate citizenship and energy efficiency, serves 4.4 million customers in the Northeast and is continuing its efforts in clean energy development.
This news is based on a press release statement and includes forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially.
In other recent news, Eversource Energy has seen significant developments. BMO Capital Markets recently adjusted the company's stock price target from $73.00 to $70.00 due to anticipated project delays and financial impairments announced by Orsted (CSE:ORSTED), a partner in the Revolution Wind offshore wind project. The project's completion date has been postponed to 2026, with an estimated delay in revenue recognition for Eversource of around $300 million.
This development is a result of additional work needed at the onshore substation, currently under construction by Eversource. However, the company has also reported matching analysts' earnings per share (EPS) expectations at $0.95 for the second quarter, leading to a previous price target increase from $69.00 to $73.00 by BMO Capital Markets.
Recent developments also highlight Eversource's commitment to regulated utility growth, with significant investments in transmission and distribution infrastructure. The company's sale of the Sunrise Wind Project has been completed, and additional wind project sales are expected in the next quarter. Furthermore, advancements in the Massachusetts AMI program indicate the company's focus on modernization, with smart meter installations set to begin next year.
InvestingPro Insights
Eversource Energy's strategic shift towards its regulated utility operations, as highlighted in the article, is reflected in recent InvestingPro data. The company's market capitalization stands at $24.31 billion, underscoring its significant presence in the utility sector. Despite the anticipated net loss from its offshore wind divestiture, Eversource's financial metrics reveal some positive trends.
An InvestingPro Tip indicates that Eversource "has raised its dividend for 25 consecutive years," demonstrating a commitment to shareholder returns even as it navigates strategic changes. This is further supported by the current dividend yield of 4.24% and a dividend growth rate of 5.93% over the last twelve months. These figures align with the company's focus on its core regulated utility business, which typically prioritizes stable returns and income for investors.
The article mentions Eversource's efforts to strengthen its financial position, which is particularly relevant given another InvestingPro Tip stating that the company "operates with a significant debt burden." This strategic realignment could help address balance sheet concerns in the long term.
Interestingly, while the company reported a net loss in its recent divestiture, InvestingPro data shows a strong return of 20.34% over the last three months, suggesting that investors may be viewing the strategic shift positively. The stock is also trading near its 52-week high, with the current price at 98.59% of the 52-week peak.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights beyond those mentioned here. In fact, there are 7 more InvestingPro Tips available for Eversource Energy, providing a deeper understanding of the company's financial health and market position.
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