National Grid plc Q4 FY25 Earnings Analysis

- National Grid is positioning to connect up to 19 gigawatts of additional demand over the 5 years to March 2031, about half expected from data centers. - CapEx investment is set to increase, with a record GBP 5.1 billion invested in the first half of the year, up 12% YoY at constant currency, targeting over GBP 11 billion for the full year. - Continued organic growth with a projected regulated asset base growth of over 10% this year versus 4% a decade ago. - U.S. investments driven by ongoing rate cases, particularly in New York and New England, supporting reliability and new infrastructure like the NESE pipeline which could save New Yorkers up to $6 billion. - U.K. capital delivery is ramping up with Wave 1 ASTI projects under construction and Wave 2 projects progressing, underpinning future revenue growth through increased asset base. - Engagement with regulators aims for frameworks allowing returns competitive internationally, supporting investment and future earnings growth.

- National Grid expects underlying earnings per share (EPS) growth of 6% to 8% per annum. - Operating profit in the first half increased by 13% to GBP 2.3 billion, driven by higher regulated revenues. - Capital investment is expected to grow around 10% per annum, supporting future earnings growth. - Improved operating performance across U.K. and U.S. regulated businesses is contributing to modest upward full-year EPS guidance. - Regulatory and policy support is strong, underpinning confidence in delivering the GBP 60 billion investment plan. - The business expects to maintain a strong balance sheet and inflation-protected dividend growth. - The focus remains on operational excellence and capital discipline to sustain growth and deliver shareholder value.

- GBP 60 billion investment plan over 5 years, with over 3/4 now underpinned by delivery mechanisms. - GBP 11 billion capital investment expected in the current year, a record for the group. - Wave 1 ASTI projects under construction; Wave 2 projects progressing with contracting underway. - Ongoing U.S. investments: GBP 1.6 billion in New York (up 5%), including $4 billion upstate upgrade; GBP 1 billion in New England (up 23%) for asset condition and system capacity. - National Grid Ventures invested GBP 69 million for asset refurbishment and new transmission projects. - Focused on transmission opportunities in the U.S., including a potential line from Maine to New England. - Work underway to support new AI growth zone data centers in the UK, connecting up to 19 GW additional demand by 2031. - Continued effort on simplifying funding frameworks and securing supply chains to enable swift capital deployment.

- No immediate plans for new hybrid bond issuance; hybrids remain a useful tool but not expected for several years. - Financing strategy set during equity raise 18 months ago remains in place: equity proceeds underpin the GBP 60 billion investment plan. - Incremental opportunities, especially in Ventures, above GBP 60 billion would be financed through partnering, off-balance sheet finance, or other routes, not impacting equity use. - No near-term debt or equity issuance planned; any future use of hybrids or other finance instruments will be evaluated as appropriate. - The focus remains on delivering the GBP 60 billion capital investment program without requiring additional equity raises beyond those already planned.

- Over 3/4 of the GBP 60 billion investment plan is now underpinned by delivery mechanisms. - All 6 Wave 1 ASTI projects are already under construction with good progress. - GBP 9 billion Great Grid Partnership for 8 onshore Wave 2 projects is operational with 7 strategic partners. - Contracting for 3 remaining Wave 2 offshore projects is progressing; Sea Link contracting completed, Eagle 3 and 4 preferred suppliers announced with contracts expected soon. - Capital investment reached a record GBP 5 billion in the first half of the year. - Full year capital investment guidance is to deploy over GBP 11 billion. - U.S. rate cases have approved around 75% of the 5-year investment plan. - Ongoing NESE pipeline regulatory approvals expected later this year. - Further competitive transmission opportunities in the U.S. being pursued, including an ISO-led opportunity in New England.