Eversource Energy: Rising Debt and Negative FCF Drive a Tighter Risk Profile

Earnings shock and balance-sheet tension: the headline#

Eversource [ES] shares slipped to $64.16 (intraday change -3.56%) as investors digested full-year results showing FY2024 net income of $811.65MM alongside free cash flow of -$2.32B and net debt of $29.09B—a set of numbers that highlights a familiar utility balance: earnings stability on the income statement but material cash and funding pressure beneath the surface. The company reported capital expenditures of -$4.48B in 2024 and paid $1.0B in dividends, leaving cash generation outpaced by investment and financing needs and driving leverage higher into the high single digits on a net-debt/EBITDA basis. (See Eversource FY2024 filings and cash-flow disclosures on the SEC EDGAR page.) Source: Eversource FY2024 filings (filed 2025-02-14)

Quick financial snapshot#

Eversource’s FY2024 report presents a mixed set of durable regulated-utility earnings and acute funding dynamics. Revenue held roughly flat at $11.90B in 2024 following $11.91B in 2023, operating income rose to $2.71B, and EBITDA increased to $4.13B. Yet cash generation after investment is negative, and leverage moved materially higher as the company financed an aggressive capex program and dividend cadence.

The following table summarizes the core income statement, balance-sheet and cash-flow aggregates for FY2021–FY2024 (figures in USD billions unless noted):

(Data points drawn from company financial statements filed FY2024–FY2021; see company filings on EDGAR and investor relations.) Source: Eversource FY2024 filings (filed 2025-02-14)

Ratios and leverage: measurable deterioration#

On a short set of ratios, Eversource’s profile shows stress relative to conservative regulated-utility norms. Using FY2024 figures, the current ratio is 0.76x (total current assets $5.08B / total current liabilities $6.72B). Total-debt-to-equity sits around 1.94x (total debt $29.11B / total stockholders’ equity $15.04B). Net-debt-to-EBITDA calculated against FY2024 EBITDA gives ~7.04x (net debt $29.09B / EBITDA $4.13B), higher than the company’s TTM net-debt/EBITDA presentation (6.44x) because of differences between FY and TTM aggregations. Those ratios illustrate heavier funding reliance as the company accelerates grid buildout.

The table below consolidates the key market and capital structure ratios cited in the report and in market data (where available):

(See FY2024 financial statements and market quote data.) [Sources: Eversource FY2024 filings; market close quote data]

Reconciling the accounting surface and cash reality#

A central tension in the FY2024 numbers is the divergence between positive net income and sharply negative free cash flow. The company reported net cash provided by operating activities of $2.16B, but with capital spending of $4.48B the free cash flow turned negative -$2.32B. Management partially financed the shortfall: net cash from financing activities was +$2.34B, and dividends of -$1.0B were paid in the year. That dynamic implies the company is monetizing debt and financing flows to sustain both capex and its dividend.

Two data inconsistencies are worth noting and were reconciled for this analysis. The balance-sheet line for cash-and-cash-equivalents is reported as $26.66MM on the FY2024 balance sheet while the cash-flow statement shows cash at end of period $127.31MM. The difference likely reflects classification choices (restricted cash, short-term investments or presentation differences between schedules). Where a conflict exists, the cash-flow statement’s year-end cash figure is typically more comprehensive for cash-movement analysis; we therefore use the cash-flow figure for flow-based ratios and the balance-sheet figure for snapshot liquidity analysis, and we flag the discrepancy for readers who will rely on absolute cash levels.

Why earnings don’t tell the whole story#

Eversource’s regulated footprint maintains stable operating margins—operating income rose to $2.71B in 2024 and operating-margin ratios remained healthy—yet the transformation of the business is capital-driven, not margin-driven. In this setting the key investor metric is not near-term operating margin but the interplay of rate-base growth, allowed returns, and cost of capital. The company’s forward-looking valuation metrics reflect that dynamic: trailing PE trades at ~28x while forward PE for 2025 consensus compresses to ~14.15x (reflecting expected earnings accretion as rate-base investments are included and as analysts project higher EPS in future years). Investors should therefore evaluate whether future rate-case outcomes and project deliveries will realize the earnings improvements embedded in forward multiples.

Capital program and strategic angle: grid buildout plus offshore-wind interconnections#

Eversource’s FY2024 capex of $4.48B continues a multi-year program to modernize distribution, expand transmission, and deliver on offshore-wind interconnections and other state-driven clean-energy mandates. The company’s geographic footprint in Connecticut, Massachusetts and New Hampshire positions it at the center of Northeast transmission needs and offshore-wind gateway projects.

That strategic transformation has two practical financial implications. First, successful project delivery and timely regulatory recovery convert capital deployed into an expanded rate base and higher permitted returns. Second, until regulators approve recovery or until projects are placed into service, capex depresses free cash flow and requires external funding. The company’s near-term task is therefore execution discipline—deliver projects on budget and get them into rate base quickly to compress the payback horizon.

Capital allocation: dividends, no buybacks, and rising leverage#

Eversource has sustained its dividend policy—dividends per share TTM $2.935, yielding ~4.59% at current prices—but the payout now exceeds operating cash and net income on an annualized basis. Measured as cash paid ($1.0B) versus FY2024 net income (cash-flow statement net income $819.17MM), the dividend payout runs above 100% (about ~122%). That dynamic constrains flexibility: with limited share-repurchase activity and elevated capex demands, the company has relied on debt markets to fund growth and shareholder distributions.

Capital markets activity in 2024 shows increases in long-term debt (long-term debt rose to $26.03B from $23.96B in 2023), and total debt increased to $29.11B. These moves are unsurprising given the scale of grid investment, but they materially increase interest-cost exposure and reduce the margin of safety against regulatory disallowances or project delays. Investors should watch the cadence of future rate-case wins and the company’s plan to re-normalize payout metrics as projects enter service and generate authorized returns.

Regulatory and execution risk: the dominant variable#

Eversource operates under a regulatory compact that both stabilizes revenue and places execution risk at the center of value creation. The company’s growth thesis depends on three interlocking items: (1) efficient execution of large transmission and distribution projects, (2) timely approval of cost recovery and allowed ROE in state rate cases, and (3) minimal regulatory disallowances or political constraints that would reduce authorized returns.

Past episodes across New England show that regulators can be rigorous when ratepayer bills rise or when storm response is judged unsatisfactory. For Eversource, the risk is that cost overruns, contractor issues, or visible failures in reliability could produce regulatory penalties or delay recovery. Conversely, constructive, predictable rate cases and well-communicated performance metrics accelerate the conversion of capex into utility earnings.

Historical context: earnings swings and the capital cycle#

Eversource’s recent multi-year pattern is illustrative: revenue stayed near $12B from 2022–2024, operating income expanded modestly, but net income swung from $1.4B in 2022 to - $442MM in 2023 and back to $812MM in 2024. Those swings reflect a mix of one-time items, regulatory timing, and operating adjustments. Importantly, EBITDA in 2024 of $4.13B returned to levels comparable with 2022, supporting the view that underlying regulated operations are intact even as cash-flow timing and capital deployment produce volatility in reported net income.

That history underscores two lessons: first, a utility’s headline net income can be noisy year-to-year; second, the sustainable story is the rate-base growth and the company’s ability to convert invested capital into regulated returns over time.

Where the numbers point next: catalysts and watch items#

Several measurable catalysts will determine whether FY2024’s tension eases or tightens in coming quarters. These include the pace of project construction and the timetable for putting major transmission assets into service (which moves assets into rate base), outcomes of pending or upcoming rate cases in the company’s jurisdictions, and the company’s access to financing at reasonable spreads.

Key near-term items to monitor on public filings and earnings calls are specific rate-case decisions and docket outcomes in Massachusetts and Connecticut, the in-service dates and final cost reconciliation for major offshore-wind interconnections, and the company’s cash-flow guidance and debt issuance plans. On the metrics front, net-debt/EBITDA movement toward the company’s targeted range and a decline in dividend payout ratio toward more sustainable levels would be constructive signals.

Comparative context: where Eversource sits in the utility universe#

Relative to a typical investment-grade regulated utility, Eversource’s leverage metrics (net-debt/EBITDA ~6.4–7.0x depending on the aggregation) and payout ratio above 100% are at the conservative / cautionary end of the spectrum. Many peers operate with net-debt/EBITDA in the mid-3x to low-5x range and payout ratios comfortably below 100%, giving them more balance-sheet flexibility for growth and rate-case outcomes. That comparative context matters because the regulatory compact assumes financial resiliency; elevated leverage reduces optionality when projects face delays or when allowed returns compress.

What this means for investors#

Investors should interpret Eversource’s FY2024 results through the lens of a regulated utility in a heavy capex phase. The company demonstrates intact regulated earnings capacity—operating income and EBITDA are healthy—but the cash conversion profile currently is negative due to capex, and leverage has risen materially. That combination increases sensitivity to three risks: adverse rate-case decisions, material project cost overruns, and sustained higher interest rates.

Near-term investor attention should therefore focus on measurable, operational outcomes rather than headline earnings. Specifically, the speed at which major projects are placed into service and the clarity of regulatory recovery mechanisms will determine whether capital deployed begins to de-lever the balance sheet or continues to pressure it. Watchable metrics include quarterly free cash flow, net-debt/EBITDA, and the company’s stated plans for dividend coverage and refinancing. (See company investor-relations releases for upcoming dockets and project timelines.) Source: Eversource investor relations

Key takeaways#

Eversource’s FY2024 financials present a clear and actionable story: the company is investing heavily to support the Northeast’s clean-energy transition, producing stable regulated operating results while generating negative free cash flow and raising leverage. The results are not unusual for a utility in a capex cycle, but they elevate execution and regulatory risk in the near term. Investors and stakeholders should therefore prioritize tracking the following: (1) rate-case outcomes and allowed ROEs, (2) project in-service timing and cost reconciliation, (3) free-cash-flow normalization, and (4) any changes to dividend policy or capital-markets activity that affect leverage.

Eversource remains a structural player in New England’s grid modernization and offshore-wind buildout. The investment story is contingent, however: capital must be absorbed into rate base predictably and with measured regulatory outcomes for the company’s balance-sheet traction to improve. In short, the FY2024 snapshot shows durable regulated operations under pressure from an aggressive capex and funding program; the next 12–24 months of regulatory decisions and project execution will determine whether those investments translate into the expected future earnings and cash-flow uplift.

(For readers seeking the primary filings behind these figures, consult Eversource’s FY2024 filings on the SEC EDGAR database and the company’s investor-relations releases.) Source: Eversource filings and investor relations