10-QPeriod: Q1 FY2014

CONSOLIDATED EDISON INC Quarterly Report for Q1 Ended Mar 31, 2014

Filed May 8, 2014For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported a significant increase in net income for the first quarter of 2014 compared to the same period in 2013, driven by improvements across its utility segments and a favorable impact from the competitive energy businesses. For the three months ended March 31, 2014, Con Edison's net income for common stock reached $361 million, or $1.23 per diluted share, a substantial rise from $192 million, or $0.65 per diluted share, in the prior year's quarter. This growth was primarily fueled by higher operating revenues, particularly in the electric and gas segments, along with improved management of operating expenses. The company's core utility operations, CECONY and O&R, demonstrated strong performance. CECONY's electric operations saw a notable revenue increase driven by higher purchased power and fuel costs, while its gas operations benefited from increased sales and transportation volumes. O&R also experienced revenue growth in both its electric and gas segments. The competitive energy businesses also contributed positively, reversing a significant loss in the prior year to a profit in the current quarter, partly due to favorable mark-to-market adjustments and the resolution of LILO transactions. Overall, Con Edison's financial results indicate a strengthening operational performance and a positive outlook for the period.

Financial Highlights

43 data points
Beta

Revenue

$3.79B

Net Income

$361.00M

9.5% Net Margin

EPS (Diluted)

$1.23

Total Assets

$40.48B

Cash & Equivalents

$102.00M

Free Cash Flow

$163.00M

Financial Statements
Beta
Revenue$3.79B
Operating Expenses$3.10B
Operating Income$685.00M
Interest Expense$146.00M
Net Income$361.00M
EPS (Basic)$1.23
EPS (Diluted)$1.23
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.10M

Key Highlights

  • 1Net income for common stock significantly increased to $361 million ($1.23/share diluted) for Q1 2014, up from $192 million ($0.65/share diluted) in Q1 2013, marking a strong start to the year.
  • 2Total operating revenues rose by 19.0% to $3,789 million for Q1 2014, driven by higher revenues across all segments, particularly CECONY's electric and gas businesses.
  • 3CECONY's electric operating income increased by $68 million, reflecting higher net revenues and improved expense management.
  • 4CECONY's gas operating income saw a slight decrease of $9 million, despite revenue growth, due to increased taxes and operations and maintenance expenses.
  • 5The competitive energy businesses swung from a net loss of $112 million in Q1 2013 to a net income of $9 million in Q1 2014, significantly boosted by favorable LILO transaction impacts and mark-to-market adjustments.
  • 6Cash flows from operating activities for Con Edison improved substantially to $224 million in Q1 2014 from a negative $84 million in Q1 2013, primarily due to tax payments and LILO transaction impacts.
  • 7Con Edison issued $850 million in long-term debt in March 2014, strengthening its financial position and repaying short-term borrowings.

Frequently Asked Questions

The primary driver for the substantial increase in net income for Con Edison in the first quarter of 2014 was a combination of stronger operational performance across its utility subsidiaries (CECONY and O&R) and a significant turnaround in the competitive energy businesses, which moved from a net loss in the prior year to a profit. Favorable impacts from LILO transactions and improved revenue management also contributed.

The LILO transactions had a notable impact, particularly in the first quarter of 2013, where they resulted in a significant after-tax charge of $150 million. In contrast, the first quarter of 2014 saw a benefit of $7 million related to these transactions, primarily due to lower than previously estimated interest on the tax liability. This shift contributed positively to the year-over-year improvement in net income.

Con Edison is actively participating in New York's 'Reforming the Energy Vision' proceeding, which aims to fundamentally restructure utility regulation to promote system efficiency, customer choice, and distributed energy resources. While the company cannot predict the exact outcome or its impact, it is engaged in the process and is evaluating potential changes to regulatory practices, tariff design, and incentive structures.

Con Edison and its subsidiaries managed their liquidity through a combination of operating cash flows, investing activities, and financing activities. In March 2014, CECONY issued $850 million in long-term debt to repay short-term borrowings and for general corporate purposes, enhancing its capital structure. Operating cash flows for Con Edison improved significantly in Q1 2014 compared to Q1 2013, primarily due to the timing of tax payments and LILO transaction effects.