10-QPeriod: Q3 FY2011

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 3, 2011For Securities:ED

Summary

Consolidated Edison Inc. (Con Edison) and its subsidiary Consolidated Edison Company of New York, Inc. (CECONY) filed this Form 10-Q for the period ending September 30, 2011. The report shows year-over-year increases in net income for both the three and nine-month periods, driven by factors such as regulatory rate adjustments, lower purchased power and fuel costs, and improved performance in competitive energy businesses. Despite these positive trends, the company faces ongoing regulatory scrutiny, environmental remediation costs, and the inherent risks of operating in the energy infrastructure sector, including the potential impact of cyber attacks. The company's financial health remains robust, supported by stable operating cash flows from its regulated utility businesses. Con Edison continues to invest in its utility plant, with significant capital expenditures in construction projects. The company also maintains a strong liquidity position, supported by its credit facilities. Investors should note the company's ongoing management of pension and postretirement benefit obligations, which continue to represent a significant financial commitment.

Financial Highlights

44 data points
Beta

Revenue

$3.63B

Net Income

$383.00M

10.6% Net Margin

EPS (Diluted)

$1.30

Total Assets

$36.53B

Cash & Equivalents

$398.00M

Free Cash Flow

$565.00M

Financial Statements
Beta
Revenue$3.63B
Operating Expenses$2.87B
Operating Income$756.00M
Interest Expense$145.00M
Net Income$383.00M
EPS (Basic)$1.31
EPS (Diluted)$1.30
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.60M

Key Highlights

  • 1Net income for common stock increased to $383 million ($1.30/share diluted) for Q3 2011 from $350 million ($1.23/share diluted) in Q3 2010, and to $860 million ($2.92/share diluted) for the nine months ended September 30, 2011, from $759 million ($2.68/share diluted) in the prior year.
  • 2Total operating revenues for Con Edison decreased slightly to $3,629 million for Q3 2011 from $3,707 million in Q3 2010, and for the nine months decreased to $9,972 million from $10,185 million.
  • 3Operating income increased for Con Edison to $756 million in Q3 2011 from $705 million in Q3 2010, and for the nine months increased to $1,781 million from $1,627 million.
  • 4Cash flows from operating activities significantly increased to $2,161 million for the nine months ended September 30, 2011, from $974 million in the prior year, primarily due to lower income tax payments and refunds received.
  • 5Utility construction expenditures remained substantial, totaling $1,412 million for Con Edison and $1,338 million for CECONY in the nine months ended September 30, 2011.
  • 6The company updated its credit agreement in October 2011, providing $2.25 billion in revolving credit, with no outstanding borrowings under the agreement at the end of the period.
  • 7Environmental remediation accruals were $496 million for Con Edison and $377 million for CECONY as of September 30, 2011, related to manufactured gas plant sites and other Superfund sites.

Frequently Asked Questions

Consolidated Edison reported an increase in net income for common stock for both the three and nine-month periods ended September 30, 2011, compared to the same periods in 2010. This improvement was driven by higher operating income, favorable regulatory rate plans, and lower purchased power and fuel costs. Operating cash flows saw a significant increase due to lower income tax payments.

The primary drivers for the increase in net income include: 1. Regulatory rate increases allowing for recovery of costs and return on equity. 2. Decreases in purchased power and fuel expenses. 3. Improved performance in competitive energy businesses. 4. Significant increase in cash flows from operating activities due to favorable tax timing and refunds.

Con Edison faces several risks and challenges, including: - Regulatory risks: Extensive regulation and potential penalties, and rate plans that may not provide adequate returns. - Operational risks: Failure to operate energy facilities safely and reliably, and construction project completion risks. - Financial risks: Substantial unfunded pension and other postretirement benefit liabilities, reliance on capital markets, and potential disallowance of tax deductions by the IRS. - Environmental risks: Costs associated with environmental remediation for sites like manufactured gas plants. - Emerging risks: The potential impact of cyber attacks on critical infrastructure.

The company continues to invest in its utility plant with significant capital expenditures for construction projects. Con Edison and its subsidiaries maintain strong liquidity, supported by a revolving credit facility of $2.25 billion, under which no borrowings were outstanding at the end of the period. The company does not anticipate the need for long-term debt issuance for the remainder of 2011 due to strong operating cash flows from tax benefits and refunds.