10-QPeriod: Q3 FY2013

CONSOLIDATED EDISON INC Quarterly Report for Q3 Ended Sep 30, 2013

Filed November 4, 2013For Securities:ED

Summary

This 10-Q filing for Consolidated Edison, Inc. (ED) for the period ending September 30, 2013, shows mixed financial performance. While net income for common stock saw an increase to $464 million for the three months ended September 30, 2013, compared to $440 million in the prior year, the nine-month period saw a decrease in net income for common stock to $828 million from $931 million in the prior year. This was largely influenced by significant after-tax charges related to the Lease In/Lease Out (LILO) transactions in the nine-month period. The company continues to invest heavily in utility construction expenditures, with net cash used in investing activities totaling $1.9 billion for the nine months ended September 30, 2013. The company is navigating a complex regulatory environment, including ongoing rate case proceedings with the New York State Public Service Commission for CECONY, which could impact future revenues. A significant event was Superstorm Sandy, which caused extensive damage and resulted in substantial restoration costs, most of which were deferred for recovery as a regulatory asset. The company is also facing potential environmental liabilities, notably concerning the Gowanus Canal Superfund Site, where the EPA has identified CECONY as a potentially responsible party. Overall, while the regulated utility segments provided stable operations, the impact of one-off items like the LILO transactions and the ongoing challenges in environmental remediation and regulatory proceedings are key factors for investors to monitor. The company maintained its common equity ratio, demonstrating a commitment to financial stability.

Financial Highlights

45 data points
Beta

Revenue

$3.48B

Net Income

$464.00M

13.3% Net Margin

EPS (Diluted)

$1.58

Total Assets

$41.96B

Cash & Equivalents

$74.00M

Free Cash Flow

$353.00M

Financial Statements
Beta
Revenue$3.48B
Operating Expenses$2.63B
Operating Income$855.00M
Interest Expense$145.00M
Net Income$464.00M
EPS (Basic)$1.58
EPS (Diluted)$1.58
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.30M

Key Highlights

  • 1Consolidated Edison, Inc. reported a net income for common stock of $464 million for the three months ended September 30, 2013, an increase from $440 million in the prior year, but a decrease to $828 million for the nine months ended September 30, 2013, from $931 million in the prior year.
  • 2Significant after-tax charges and gains related to the termination of Lease In/Lease Out (LILO) transactions impacted net income, particularly for the competitive energy businesses, resulting in a $95 million charge for the nine-month period.
  • 3Utility construction expenditures remained high, with Con Edison using $1.9 billion in investing activities for the nine months ended September 30, 2013.
  • 4The company experienced significant costs and deferred assets related to Superstorm Sandy, with response and restoration costs of $471 million for CECONY and $92 million for O&R.
  • 5CECONY is undergoing rate case proceedings with the NYSPSC, with initial proposals suggesting rate decreases, which could impact future revenue if approved.
  • 6Environmental liabilities remain a concern, particularly with CECONY identified as a potentially responsible party for the Gowanus Canal Superfund Site.
  • 7The common equity ratio remained stable at approximately 53.6% for both Con Edison and CECONY as of September 30, 2013.

Frequently Asked Questions

The termination of the Lease In/Lease Out (LILO) transactions had a mixed impact. For the three months ended September 30, 2013, it resulted in an after-tax gain of $26 million and increased net income by that amount. However, for the nine months ended September 30, 2013, it resulted in an after-tax charge of $95 million, reducing net income. These impacts were primarily recognized within the competitive energy businesses segment.

CECONY filed for electric, gas, and steam rate changes effective January 1, 2014. The NYSPSC staff's initial briefs proposed rate decreases, while CECONY's reply briefs supported increases. The NYSPSC appointed a settlement judge, indicating ongoing discussions. The outcome of these proceedings is uncertain but could significantly impact future revenues and profitability.

Superstorm Sandy caused significant damage, and the Utilities incurred substantial response and restoration costs. Most of these costs, other than capitalized expenditures, were deferred for recovery as a regulatory asset under the Utilities' electric rate plans, allowing for potential future recovery from customers.

The company faces potential liabilities related to environmental matters, including Superfund Sites, such as the Gowanus Canal where CECONY has been identified as a potentially responsible party, and manufactured gas plant sites. The full extent and cost of remediation for some of these sites are not yet determinable but could be material.