10-QPeriod: Q3 FY2010

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2010

Filed November 1, 2010For Securities:ED

Summary

Consolidated Edison Inc. (ED) reported solid financial results for the nine months ended September 30, 2010, with net income for common stock increasing to $759 million ($2.69 per share) from $666 million ($2.43 per share) in the same period of 2009. This growth was driven primarily by favorable regulatory rate plans, particularly for CECONY's electric utility, which allowed for higher revenue recovery to offset rising operating expenses such as O&M, depreciation, and taxes. The company's core utility operations, primarily CECONY, showed resilience, with net income for common stock up $94 million year-over-year for the nine-month period. While operating revenues saw a modest increase, careful management of operating expenses and strategic rate adjustments contributed to improved profitability. The company also experienced a significant increase in cash flow from financing activities, largely due to debt issuances and stock issuances, which supported its investing activities, primarily capital expenditures for utility plant construction. Despite a decrease in cash flow from operations due to tax payments, the overall financial position appears stable, supported by strong regulatory frameworks and continued investment in infrastructure.

Financial Highlights

28 data points
Beta

Revenue

$3.71B

Net Income

$350.00M

9.4% Net Margin

EPS (Diluted)

$1.23

Cash & Equivalents

$198.00M

Free Cash Flow

$177.00M

Financial Statements
Beta
Revenue$3.71B
Operating Expenses$3.00B
Operating Income$705.00M
Interest Expense$152.00M
Net Income$350.00M
EPS (Basic)$1.24
EPS (Diluted)$1.23
Shares Outstanding (Basic)283.00M
Shares Outstanding (Diluted)284.60M

Key Highlights

  • 1Net income for common stock rose to $759 million for the nine months ended September 30, 2010, up from $666 million in the prior year period.
  • 2Earnings per diluted share increased to $2.69 from $2.43 for the same nine-month period.
  • 3Total operating revenues for the nine months increased to $10.185 billion from $9.758 billion in the prior year.
  • 4CECONY's electric utility segment saw significant revenue and operating income growth due to favorable rate plans.
  • 5Cash flows from financing activities increased substantially, reflecting debt and equity issuances.
  • 6Capital expenditures for utility plant construction remained substantial, indicating ongoing investment in infrastructure.

Frequently Asked Questions

The primary drivers for the increase in net income were favorable regulatory rate plans, particularly for CECONY's electric utility, which allowed for increased revenue to cover rising operating expenses like operations and maintenance, depreciation, and taxes. Improved performance in the competitive energy businesses, excluding mark-to-market effects, also contributed positively.

While some operating expenses, such as O&M, depreciation, and taxes, increased, the company implemented cost control efforts. For the nine-month period, higher costs for pension and other post-retirement benefits were also noted. Favorable rate plans were crucial in allowing the recovery of these increased costs through customer rates.

The company expects to spend approximately $160 million less on construction expenditures for 2010 than initially planned. The company anticipates significant tax benefits in the coming months that will boost cash flow from operations. While the Utilities do not foresee a need for additional long-term debt for the remainder of 2010, CECONY is considering issuing debt to refund outstanding securities. CECONY is also reviewing its capital requirements for 2011 and 2012 and expects to defer certain projects, leading to decreased capital expenditures in those years.

The company is involved in ongoing Superfund site investigations and remediation, permit non-compliance and pollution discharge proceedings, and investigations into vendor payments due to alleged unlawful conduct. While the company believes its internal controls were effective, the impact of ongoing investigations on future results is uncertain. Additionally, there was a material contingency related to a Manhattan steam main rupture in 2007, with numerous lawsuits pending.