10-QPeriod: Q2 FY2010

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 6, 2010For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported increased net income for the second quarter and first half of 2010 compared to the same periods in 2009. This improvement was driven by favorable regulatory rate plans, particularly for CECONY's electric business, and positive performance from competitive energy businesses, which included significant mark-to-market gains. Total operating revenues saw a modest increase, reflecting growth in electric and gas services, partially offset by declines in steam and non-utility segments. While operating expenses also rose due to higher pension and post-retirement benefit costs, demand-side management programs, and property taxes, the positive impact of rate adjustments and improved results in the competitive segment led to higher overall profitability. The company maintained a stable common equity ratio and demonstrated a solid earnings-to-fixed-charges ratio, indicating a generally healthy financial position. However, investors should note the ongoing regulatory processes, environmental remediation costs, and potential liabilities from legal proceedings, which remain important considerations.

Financial Highlights

44 data points
Beta

Revenue

$3.02B

Net Income

$183.00M

6.1% Net Margin

EPS (Diluted)

$0.64

Total Assets

$34.39B

Cash & Equivalents

$178.00M

Free Cash Flow

$791.00M

Financial Statements
Beta
Revenue$3.02B
Operating Expenses$2.59B
Operating Income$429.00M
Interest Expense$148.00M
Net Income$183.00M
EPS (Basic)$0.65
EPS (Diluted)$0.64
Shares Outstanding (Basic)282.00M
Shares Outstanding (Diluted)283.50M

Key Highlights

  • 1Net income for common stock increased to $183 million ($0.65/share) for Q2 2010 and $409 million ($1.45/share) for H1 2010, up from $150 million ($0.55/share) and $330 million ($1.20/share) in the prior year periods.
  • 2Total operating revenues increased to $3,017 million for Q2 2010 and $6,478 million for H1 2010, driven by higher electric revenues.
  • 3Competitive energy businesses significantly contributed to earnings, partly due to mark-to-market gains of $39 million (after-tax) in Q2 and $1 million (after-tax) in H1 2010.
  • 4Operating expenses increased due to higher pension and other post-retirement benefit costs, demand-side management programs, and property taxes.
  • 5CECONY's electric operating income increased by $7 million for Q2 and $56 million for H1 2010, driven by rate increases and higher net revenues.
  • 6The company reported a common equity ratio of 49.1% as of June 30, 2010, indicating a stable capital structure.
  • 7Consolidated Edison issued $700 million in long-term debt during the first half of 2010 to manage its financing needs.

Frequently Asked Questions

The primary driver for the increase in net income was the positive impact of regulatory rate plans, particularly for CECONY's electric business, which allowed for higher revenue recovery. Additionally, the competitive energy businesses reported improved performance, partly due to favorable mark-to-market adjustments.

Operating expenses increased due to higher costs associated with pension and other post-retirement benefits, increased spending on demand-side management programs, and higher property taxes. These increases were partially offset by cost control efforts and savings in certain operating expenses.

The company acknowledges ongoing liabilities related to Superfund sites and environmental remediation, including manufactured gas plant sites. While regulatory assets are used to defer some costs for future recovery, the ultimate liability is difficult to estimate and could be material. The company is also managing asbestos-related litigation and other environmental compliance matters.

The company's liquidity is supported by cash flows from operating, investing, and financing activities. For the six months ended June 30, 2010, net cash flows from financing activities showed an increase due to debt issuances and commercial paper activity. Capital requirements are being met through a combination of internal cash generation and external financing, with a focus on maintaining a stable capital structure and a solid earnings-to-fixed-charges ratio.