10-QPeriod: Q2 FY2014

CONSOLIDATED EDISON INC Quarterly Report for Q2 Ended Jun 30, 2014

Filed August 7, 2014For Securities:ED

Summary

Consolidated Edison, Inc. (Con Edison) reported improved financial performance for the six months ended June 30, 2014, compared to the same period in 2013, with net income for common stock increasing significantly. This improvement was driven by higher net revenues across its utility segments, particularly CECONY's electric and gas operations, and a notable gain from the sale of solar energy projects within its competitive energy businesses. The company also benefited from favorable adjustments related to prior LILO transactions and lower interest expenses. Despite these positive trends, the company is navigating a complex regulatory environment, including the ongoing "Reforming the Energy Vision" proceeding in New York and potential impacts from the EPA's proposed Clean Power Plan. Con Edison's balance sheet shows a slight decrease in total assets, largely due to a reduction in non-utility property and special deposits, while utility plant assets increased. Long-term debt saw an increase, reflecting new issuances. The company's liquidity remains solid, with a net increase in cash and temporary cash investments for the period, supported by strong operating cash flows, although financing activities showed a significant decrease compared to the prior year. Investors should monitor regulatory developments and their potential impact on future revenue and cost structures.

Financial Highlights

43 data points
Beta

Revenue

$2.91B

Net Income

$212.00M

7.3% Net Margin

EPS (Diluted)

$0.72

Total Assets

$40.31B

Cash & Equivalents

$774.00M

Free Cash Flow

$981.00M

Financial Statements
Beta
Revenue$2.91B
Operating Expenses$2.50B
Operating Income$455.00M
Interest Expense$147.00M
Net Income$212.00M
EPS (Basic)$0.73
EPS (Diluted)$0.72
Shares Outstanding (Basic)292.90M
Shares Outstanding (Diluted)294.00M

Key Highlights

  • 1Net income for common stock increased by $210 million to $574 million for the six months ended June 30, 2014, compared to $364 million in the prior year period.
  • 2Total operating revenues increased by $697 million to $6,700 million for the six months ended June 30, 2014.
  • 3A gain on the sale of solar energy projects contributed $26 million (after-tax) to net income in the competitive energy businesses.
  • 4CECONY's electric operating income increased by $110 million for the six months ended June 30, 2014, driven by higher net revenues and rate plan adjustments.
  • 5Total assets decreased slightly to $40,311 million at June 30, 2014, primarily due to reductions in non-utility property and special deposits.
  • 6Long-term debt increased by $635 million to $11,084 million at June 30, 2014.
  • 7Net cash flows from operating activities increased by $392 million to $1,257 million for Con Edison for the six months ended June 30, 2014, compared to the prior year, partly due to timing of tax payments and LILO transaction effects.

Frequently Asked Questions

The significant increase in net income for Con Edison during the first half of 2014 was primarily driven by higher net revenues from its utility operations, particularly CECONY's electric and gas segments, a substantial gain from the sale of solar energy projects within its competitive energy businesses, and favorable adjustments related to prior LILO (Lease In/Lease Out) transactions. Lower interest expenses also contributed to the improved bottom line.

Total assets slightly decreased to $40,311 million as of June 30, 2014, mainly due to reductions in non-utility property and special deposits. Conversely, long-term debt increased by $635 million to $11,084 million, reflecting new debt issuances. The company maintained a strong common equity ratio, indicating a stable capital structure.

Con Edison is closely watching New York's 'Reforming the Energy Vision' proceeding, which aims to restructure distribution utility regulation and could significantly alter utility business models. Additionally, the EPA's proposed Clean Power Plan to reduce carbon emissions could lead to substantial costs for the company. Both of these initiatives present significant regulatory and environmental factors that warrant investor attention.

The competitive energy businesses contributed positively to net income, largely due to a $26 million after-tax gain from the sale of solar energy projects and favorable LILO transaction adjustments. However, the utility segments, CECONY and O&R, remain the core contributors to operating revenue and income, reflecting the stable, regulated nature of their businesses. The competitive businesses experienced increased operating revenues but also higher purchased power and gas costs.