10-QPeriod: Q1 FY2013

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed May 2, 2013For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) and its subsidiary, Consolidated Edison Company of New York, Inc. (CECONY), reported lower net income for the first quarter of 2013 compared to the same period in 2012. This decline was primarily driven by a significant after-tax charge of $150 million related to Lease In/Lease Out (LILO) transactions impacting Con Edison's competitive energy businesses, as well as higher operating and maintenance expenses. Despite the decrease in net income, the core utility operations of CECONY and O&R demonstrated resilience. CECONY saw an increase in operating income driven by higher net revenues from its electric, gas, and steam segments, partly offset by increased operating expenses. The company also experienced growth in its gas delivery volumes, benefiting from weather normalization mechanisms. Investors should note the substantial regulatory assets and liabilities, particularly those related to pensions and environmental remediation, which are characteristic of regulated utility operations.

Financial Highlights

46 data points
Beta

Revenue

$3.18B

Net Income

$192.00M

6.0% Net Margin

EPS (Diluted)

$0.65

Total Assets

$41.74B

Cash & Equivalents

$132.00M

Free Cash Flow

-$175.00M

Financial Statements
Beta
Revenue$3.18B
Operating Expenses$2.66B
Operating Income$526.00M
Interest Expense$143.00M
Net Income$192.00M
EPS (Basic)$0.66
EPS (Diluted)$0.65
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.20M

Key Highlights

  • 1Net income for common stock decreased to $192 million ($0.65/share) in Q1 2013 from $277 million ($0.94/share) in Q1 2012.
  • 2A significant $150 million after-tax charge was recorded in Q1 2013 related to unfavorable LILO transaction rulings.
  • 3Operating revenues increased by 3.4% to $3,184 million for Con Edison, driven by higher revenues from regulated utilities.
  • 4CECONY's electric operating income decreased by $35 million due to higher operations and maintenance costs, while its gas and steam operating income increased.
  • 5CECONY's gas delivery volumes increased significantly by 17.8% for firm customers.
  • 6Con Edison's total assets increased to $41,736 million as of March 31, 2013, from $41,209 million at December 31, 2012.
  • 7The company continues to invest heavily in utility plant construction, with expenditures of $538 million for CECONY and $515 million for O&R in Q1 2013.

Frequently Asked Questions

The primary reason for the decrease in net income for the first quarter of 2013 compared to the same period in 2012 is a substantial $150 million after-tax charge related to Lease In/Lease Out (LILO) transactions impacting Con Edison's competitive energy businesses. Additionally, higher operating and maintenance expenses, particularly pension costs, contributed to the decline.

The regulated utility segments, particularly CECONY, showed resilience. CECONY's electric, gas, and steam operations generated higher net revenues. Gas delivery volumes saw significant growth. While electric operating income saw a decrease due to higher operating expenses, the overall performance of the utility segments remained robust, supported by regulatory mechanisms like revenue decoupling.

Key regulatory matters include ongoing proceedings related to the prudency of CECONY expenditures following employee arrests for illegal payments, and investigations into the company's preparation and performance during Superstorm Sandy. Environmentally, the company continues to accrue liabilities for Superfund sites and manufactured gas plant remediation, with significant estimated potential liabilities for these matters.

The company's liquidity is supported by cash flows from operations, investing, and financing activities. Despite a net decrease in cash and temporary cash investments for Con Edison in Q1 2013, largely due to a special deposit related to the LILO transactions, the company issued long-term debt and managed short-term borrowings. Significant capital expenditures for utility plant construction are ongoing, funded through a combination of these sources.